Good morning. Yesterday the Conference Board reported that its Consumer Confidence Index rose to 52.9, up from November. The reading is still far short of the 90 that would signify a solid economy, but it is well above the historic low of 25.3 in February. Also the 5-yr Note auction went pretty well and the S&P/Case-Shiller home price index move up .4% in October, which was the 5th month in a row moving higher. Their index is still down more than 7% from October 2008, but some seasonality is creeping into the numbers – things tend to slow down in the winter.
We have the December Chicago Purchasing Manager’s Survey and the weekly Jobless Claims number tomorrow. Today we have a 7-yr notes auction. There was some improving mortgage pricing yesterday and this morning mortgage prices are slightly better. Have a good one today. Only 2 days to 2010. Where’s my George Jetson car?
Wednesday, December 30, 2009
12/29/09
Rates were up again yesterday, but then improved ever so slightly in spite of a mediocre 2-year note auction. This morning, and this week, we will have the S&P/Case-Shiller index, the Chicago Purchasing Manager’s Survey, Jobless Claims. One thing working in our favor is that the bond market is technically extremely “oversold”, so, like a spring, may be due to head the other way. But there is no bounce-back yet. This morning mortgage rates are worse by another .125.
Monday, December 28, 2009
Mortgage Market Review - 12/28/09
This Morning…Monday, December 28, 2009:
There are no economic reports today, but interest rates are still continuing their slide from last Thursday. There is a Treasury auction today. Many investors will be closely eyeing demand as interest rates are climbing ahead of any Fed moves to tighten. As the dollar improves, there is concern that foreign central bank demand will abate and that higher rates will be demanded.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market took a beating as stocks surged despite mixed data. Existing home sales in November rose a surprising 7.4%. However, revised gross domestic product figures showed the economy only grew 2.2%, which was weaker than the expected 2.8% mark. Personal income and outlays data came in weaker than expected helping a bit. Unfortunately, the thin trading conditions magnified the earlier losses and made it difficult to recover. For the week interest rates rose by about ¼ to 3/8%.
This Week:
This week, of course, is shortened by the holiday on Friday, but prior to that we have a Treasury auction to get through. If foreign demand falters we will likely see mortgage interest rates head higher. The bond market will close early Thursday in advance of the New Year’s Holiday Friday. The scheduled economic news is pretty light, with the S&P/Case-Shiller price index and Consumer Confidence tomorrow, and the Chicago Purchasing Manager’s Survey on Wednesday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
2-year Treasury Note Auction
Monday, Dec. 28,1:00 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Confidence
Tuesday, Dec. 29,10:00 am, et
49.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
5-year Treasury Note Auction
Tuesday, Dec. 29,1:00 pm, et
None
Important. $46 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Wednesday, Dec. 30,1:00 pm, et
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Dec. 31,8:30 am, et
470K
Moderately Important. An indication of employment. Higher than expected claims may help rates improve.
New Years Day
Friday, Jan. 1
None
Important. Thin trading conditions and a shortened trading week could result in significant market volatility.
Market Forecast:
This week’s Consumer Confidence release will be eagerly anticipated. It is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher. With mortgage interest rates relatively low, capitalizing on current levels is recommended to protect against future volatility. Remember, mortgage interest rates tend to trend lower slowly, while increases tend to occur quickly. A cautious approach is necessary to protect from future market volatility.
Some Humor: (I had one more Christmas joke)
There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses. One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.
The letter read: Dear God, I am an 83 year old widow, living on a very small pension. Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment.
Next Sunday is Christmas, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope. Can you please help me? Sincerely, Edna.
The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.
By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.
The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.Christmas came and went.
A few days later, another letter came from the same old lady to God. All the workers gathered around while the letter was opened.
It read:
Dear God, How can I ever thank you enough for what you did for me? Because of your gift of love, I was able to fix a glorious dinner for my friends. We had a very nice day and I told my friends of your wonderful gift. By the way, there was $4 missing. I think it might have been those *&^%’s at the post office.
Sincerely, Edna.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
There are no economic reports today, but interest rates are still continuing their slide from last Thursday. There is a Treasury auction today. Many investors will be closely eyeing demand as interest rates are climbing ahead of any Fed moves to tighten. As the dollar improves, there is concern that foreign central bank demand will abate and that higher rates will be demanded.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The bond market took a beating as stocks surged despite mixed data. Existing home sales in November rose a surprising 7.4%. However, revised gross domestic product figures showed the economy only grew 2.2%, which was weaker than the expected 2.8% mark. Personal income and outlays data came in weaker than expected helping a bit. Unfortunately, the thin trading conditions magnified the earlier losses and made it difficult to recover. For the week interest rates rose by about ¼ to 3/8%.
This Week:
This week, of course, is shortened by the holiday on Friday, but prior to that we have a Treasury auction to get through. If foreign demand falters we will likely see mortgage interest rates head higher. The bond market will close early Thursday in advance of the New Year’s Holiday Friday. The scheduled economic news is pretty light, with the S&P/Case-Shiller price index and Consumer Confidence tomorrow, and the Chicago Purchasing Manager’s Survey on Wednesday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
2-year Treasury Note Auction
Monday, Dec. 28,1:00 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Confidence
Tuesday, Dec. 29,10:00 am, et
49.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
5-year Treasury Note Auction
Tuesday, Dec. 29,1:00 pm, et
None
Important. $46 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction
Wednesday, Dec. 30,1:00 pm, et
None
Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims
Thursday, Dec. 31,8:30 am, et
470K
Moderately Important. An indication of employment. Higher than expected claims may help rates improve.
New Years Day
Friday, Jan. 1
None
Important. Thin trading conditions and a shortened trading week could result in significant market volatility.
Market Forecast:
This week’s Consumer Confidence release will be eagerly anticipated. It is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher. With mortgage interest rates relatively low, capitalizing on current levels is recommended to protect against future volatility. Remember, mortgage interest rates tend to trend lower slowly, while increases tend to occur quickly. A cautious approach is necessary to protect from future market volatility.
Some Humor: (I had one more Christmas joke)
There was a man who worked for the Post Office whose job was to process all the mail that had illegible addresses. One day, a letter came addressed in a shaky handwriting to God with no actual address. He thought he should open it to see what it was about.
The letter read: Dear God, I am an 83 year old widow, living on a very small pension. Yesterday someone stole my purse. It had $100 in it, which was all the money I had until my next pension payment.
Next Sunday is Christmas, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with, have no family to turn to, and you are my only hope. Can you please help me? Sincerely, Edna.
The postal worker was touched. He showed the letter to all the other workers. Each one dug into his or her wallet and came up with a few dollars.
By the time he made the rounds, he had collected $96, which they put into an envelope and sent to the woman.
The rest of the day, all the workers felt a warm glow thinking of Edna and the dinner she would be able to share with her friends.Christmas came and went.
A few days later, another letter came from the same old lady to God. All the workers gathered around while the letter was opened.
It read:
Dear God, How can I ever thank you enough for what you did for me? Because of your gift of love, I was able to fix a glorious dinner for my friends. We had a very nice day and I told my friends of your wonderful gift. By the way, there was $4 missing. I think it might have been those *&^%’s at the post office.
Sincerely, Edna.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
12/23/09
Good morning. So, how glad are you that you don’t live in the Midwest or East Coast? Tuesday was another tough day for mortgage rates due to a lack of buyers. Analysts brought up the fact that mortgage securities are somewhat expensive relative to risk-free Treasury securities and once again wondered what will happen if the Fed buying program comes to an end.
Maybe here today, after 3 days of higher rates, we’ll see a change. We’ve already had some decent numbers from Personal Income and Consumption. Incomes here in the US saw their biggest gain in six months, and consumer spending rose .5% (expected +.6%) for a second straight month in November. At 10AM EST we’ll see New Home Sales, and the University of Michigan survey, and later today we’ll find out how much the government is selling next week in their 2, 5, and 7-yr Treasury auctions. Right now mortgage rates are unchanged from late yesterday afternoon.
Maybe here today, after 3 days of higher rates, we’ll see a change. We’ve already had some decent numbers from Personal Income and Consumption. Incomes here in the US saw their biggest gain in six months, and consumer spending rose .5% (expected +.6%) for a second straight month in November. At 10AM EST we’ll see New Home Sales, and the University of Michigan survey, and later today we’ll find out how much the government is selling next week in their 2, 5, and 7-yr Treasury auctions. Right now mortgage rates are unchanged from late yesterday afternoon.
12/22/09
Good morning. It was not a good day for interest rates yesterday. Some traders blamed a rallying stock market, thin holiday trading done by “the B-team”, few buyers ahead of year-end, or the chance that next week’s auctions will be poorly received.
Today we’ve already had some news out. The final revision to the 3rd Quarter GDP numbers came out which showed that the U.S. economy grew at a much slower pace than initially thought. Is that mortgage rates? Nope. This morning rates are worse by another 1/8%. At 10AM EST we’ll have Existing Home Sales. As they say…”You better watch out…you better not cry…
Today we’ve already had some news out. The final revision to the 3rd Quarter GDP numbers came out which showed that the U.S. economy grew at a much slower pace than initially thought. Is that mortgage rates? Nope. This morning rates are worse by another 1/8%. At 10AM EST we’ll have Existing Home Sales. As they say…”You better watch out…you better not cry…
Monday, December 21, 2009
Mortgage Market Review - 12/21/09
This Morning…Monday, December 21, 2009:
There is no economic data today and as a result the market opened soft this morning. Mortgage rates have worsened as the DOW is currently up over 100 points.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. Rates initially spiked higher following higher than expected producer price index figures. Fortunately the consumer price index showed tame inflation on the consumer level and mortgage bonds were able to recover. The Fed kept rates unchanged, indicated they would try to keep rates low for some time, but also warned that long term security purchases would cease at the end of the 1st quarter of 2010. Overall for the week, interest rates fell by about 1/8% from the prior week.
This Week:
Today is quiet, tomorrow we have Existing Home Sales and the final GDP numbers for the third quarter. Wednesday is Personal Income and Consumption, New Home Sales, Consumer Sentiment, and Building Permits – along with the announcement of the size of next week’s Treasury auction. The morning of Christmas Eve we have Durable Goods and Jobless Claims that come out at 8:30AM EST, about 10 minutes before everyone on Wall Street heads home.
The inflation data will be the most important release this week. The recent inflation reports were mixed. The PCE price index will be carefully watched for any signs of inflationary pressures. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
Q3 GDP
Tuesday, Dec. 22,8:30 am, et
Up 2.7%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Existing Home Sales
Tuesday, Dec. 22,10:00 am, et
Up 3.3%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Personal Income and Outlays
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Up 0.7%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Price Index
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Core up 0.1%
Important. A measure of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Dec. 23,10:00 am, et
73.9
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Dec. 23,10:00 am, et
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Durable Goods Orders
Thursday, Dec. 24, 8:30 am, et
Up 0.4%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Market Forecast:
The Federal Reserve left interest rates unchanged last week as expected. The remarks were mixed and caused some mortgage market uncertainty. The Fed statement indicated, "subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of their purchases of mortgage-backed securities and agency debt. It anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets.
The Fed’s challenge will be stepping out of the mortgage market without causing mortgage interest rates to spike uncontrollably higher. The housing sector is a vital component of the economy. The last thing the Fed needs is for mortgage interest rates to escalate causing the housing sector to suffer. While the most recent data shows positive housing trends across most of the nation, analysts attribute the positive movements to artificially low mortgage interest rates tied to the Fed buying of mortgage bonds. How this will all play out is still very uncertain. Now is a great time to take advantage of rates at these historically favorable levels.
Some Humor:
It is near the Christmas break of the school year. The students have turned in all their work and there is really nothing more to do. All the children are restless and the teacher decides to have an early dismissal.
Teacher: "Whoever answers the questions I ask, first and correctly, can leave early today."
Little Johnny says to himself "Good, I want to get outta here. I'm smart and will answer the question."
Teacher: "Who said 'Four Score and Seven Years Ago'?"
Before Johnny can open his mouth, Susie says, "Abraham Lincoln."
Teacher: "That's right Susie, you can go home."
Johnny is mad that Susie answered the question first.
Teacher: "Who said 'I Have a Dream'?"
Before Johnny can open his mouth, Mary says, "Martin Luther King."Teacher:
"That's right Mary, you can go."
Johnny is even madder than before.
Teacher: "Who said 'Ask not, what your country can do for you'?"
Before Johnny can open his mouth, Nancy says, "John F. Kennedy."
Teacher: "That's right Nancy, you may also leave."
Johnny is boiling mad that he has not been able to answer to any of the questions.
When the teacher turns her back Johnny says, "I wish these “gals” would keep their mouths shut!"
The teacher turns around: "NOW WHO SAID THAT?"
Johnny: "TIGER WOODS. CAN I GO NOW?"
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
There is no economic data today and as a result the market opened soft this morning. Mortgage rates have worsened as the DOW is currently up over 100 points.
Last Week:
Mortgage bond prices rose last week pushing mortgage interest rates lower. Rates initially spiked higher following higher than expected producer price index figures. Fortunately the consumer price index showed tame inflation on the consumer level and mortgage bonds were able to recover. The Fed kept rates unchanged, indicated they would try to keep rates low for some time, but also warned that long term security purchases would cease at the end of the 1st quarter of 2010. Overall for the week, interest rates fell by about 1/8% from the prior week.
This Week:
Today is quiet, tomorrow we have Existing Home Sales and the final GDP numbers for the third quarter. Wednesday is Personal Income and Consumption, New Home Sales, Consumer Sentiment, and Building Permits – along with the announcement of the size of next week’s Treasury auction. The morning of Christmas Eve we have Durable Goods and Jobless Claims that come out at 8:30AM EST, about 10 minutes before everyone on Wall Street heads home.
The inflation data will be the most important release this week. The recent inflation reports were mixed. The PCE price index will be carefully watched for any signs of inflationary pressures. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
EconomicIndicator
Q3 GDP
Tuesday, Dec. 22,8:30 am, et
Up 2.7%
Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Existing Home Sales
Tuesday, Dec. 22,10:00 am, et
Up 3.3%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Personal Income and Outlays
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Up 0.7%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Price Index
Wednesday, Dec. 23,8:30 am, et
Up 0.5%,Core up 0.1%
Important. A measure of inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Dec. 23,10:00 am, et
73.9
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Dec. 23,10:00 am, et
Up 2.3%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Durable Goods Orders
Thursday, Dec. 24, 8:30 am, et
Up 0.4%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Market Forecast:
The Federal Reserve left interest rates unchanged last week as expected. The remarks were mixed and caused some mortgage market uncertainty. The Fed statement indicated, "subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of their purchases of mortgage-backed securities and agency debt. It anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets.
The Fed’s challenge will be stepping out of the mortgage market without causing mortgage interest rates to spike uncontrollably higher. The housing sector is a vital component of the economy. The last thing the Fed needs is for mortgage interest rates to escalate causing the housing sector to suffer. While the most recent data shows positive housing trends across most of the nation, analysts attribute the positive movements to artificially low mortgage interest rates tied to the Fed buying of mortgage bonds. How this will all play out is still very uncertain. Now is a great time to take advantage of rates at these historically favorable levels.
Some Humor:
It is near the Christmas break of the school year. The students have turned in all their work and there is really nothing more to do. All the children are restless and the teacher decides to have an early dismissal.
Teacher: "Whoever answers the questions I ask, first and correctly, can leave early today."
Little Johnny says to himself "Good, I want to get outta here. I'm smart and will answer the question."
Teacher: "Who said 'Four Score and Seven Years Ago'?"
Before Johnny can open his mouth, Susie says, "Abraham Lincoln."
Teacher: "That's right Susie, you can go home."
Johnny is mad that Susie answered the question first.
Teacher: "Who said 'I Have a Dream'?"
Before Johnny can open his mouth, Mary says, "Martin Luther King."Teacher:
"That's right Mary, you can go."
Johnny is even madder than before.
Teacher: "Who said 'Ask not, what your country can do for you'?"
Before Johnny can open his mouth, Nancy says, "John F. Kennedy."
Teacher: "That's right Nancy, you may also leave."
Johnny is boiling mad that he has not been able to answer to any of the questions.
When the teacher turns her back Johnny says, "I wish these “gals” would keep their mouths shut!"
The teacher turns around: "NOW WHO SAID THAT?"
Johnny: "TIGER WOODS. CAN I GO NOW?"
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, December 18, 2009
12/18/09
Rates had a good day yesterday, as volatility continues to increase. Jobless Claims moved rates one way, but then Leading Economic Indicators rose in November (more than forecast) and pushed them another way. Lastly, the Philly Fed survey rose to its highest level since April of 2005! In the absence of any economic news today, mortgage prices are roughly unchanged. Have a great weekend
12/17/09
Good morning. The big mid-day news yesterday was the Fed’s announcement. They are leaving overnight rates unchanged, as expected, but the markets were more interested in the verbiage of the statement. “Economic activity has continued to pick up and that the deterioration in the labor market is abating. The housing sector has shown some signs of improvement…Household spending appears to be expanding at a moderate rate…”
Jobless Claims rose unexpectedly last week. This news, combined with a rally in the value of the dollar, is giving the stock markets “fits” and lowering interest rates.
Jobless Claims rose unexpectedly last week. This news, combined with a rally in the value of the dollar, is giving the stock markets “fits” and lowering interest rates.
12/16/09
Good morning. There’s a lot to report today. Rates moved higher yesterday morning as Treasury rates hit their highest levels since August. Obviously volatility picked up, which tends to make mortgage prices a little worse. The news that inflation at the producer level was worse than expected did not help. After that we saw Industrial Production rise in November (the fourth gain in five months) and Capacity Utilization rise also.
This morning we’re off to the races with Housing Starts. Starts were up 8.9% but were still lower than expected. This is the largest percentage increase since May, which is nice to see, and although housing starts are still down over 12% versus a year ago, they are much better than the 54.9% drop seen in January. Single family numbers were up about 2%, but the volatile multifamily segment was up over 67%. New building permits, which give a sense of future home construction, rose 6%, the highest since November 2008. We also had the Consumer Price Index, which rose in line with expectations in November. Prices rose over the last 12 months, as expected, the first year-over-year gain since February. Today we have the Fed announcement, so look for some potential volatility. For now mortgages are about unchanged from Tuesday afternoon.
This morning we’re off to the races with Housing Starts. Starts were up 8.9% but were still lower than expected. This is the largest percentage increase since May, which is nice to see, and although housing starts are still down over 12% versus a year ago, they are much better than the 54.9% drop seen in January. Single family numbers were up about 2%, but the volatile multifamily segment was up over 67%. New building permits, which give a sense of future home construction, rose 6%, the highest since November 2008. We also had the Consumer Price Index, which rose in line with expectations in November. Prices rose over the last 12 months, as expected, the first year-over-year gain since February. Today we have the Fed announcement, so look for some potential volatility. For now mortgages are about unchanged from Tuesday afternoon.
12/15/09
U.S. producer prices were up more than expected in November, mostly due to energy costs. (Analysts seemed to believe that the PPI was only going to be up last month.) Year-over-year the PPI was up 2.4% in November versus an expected number of +1.6%. Gas was up over 14%, hurting Escalade and Hummer drivers everywhere, and the “core rate” without food and energy was +.5%. Although we still have Industrial Production and Capacity Utilization ahead this morning, currently the bond market is taking the news on the chin and mortgage prices are worsened
Mortgage Market Review - 12/14/09
Good morning. I often get asked about my opinion regarding “floating” or “locking” an interest rate. As we all know, mortgage interest rates change on a daily and intra-day basis. With so much volatility, it is often difficult to make the right decision regarding floating or locking. What is important to remember is the fact that there is a difference between gambling and taking a calculated risk when making mortgage interest rate decisions. Floating into an economic release such as the employment report is usually a gamble, as was evident with the rate spike the beginning of this month. In addition, floating over a span of more than a few days is also a gamble. Unforeseen events can cause instability in the financial markets which results in mortgage interest rate volatility. On the contrary, floating on a day of positive market movement with no economic data the following day, while such action is still vulnerable to market movements, can be considered a calculated risk. It is possible for interest rates to push lower due to the uncertain future of the economy. Unfortunately the recent focus has been towards rate increases, which generally don’t bode well for lower mortgage interest rates. Taking advantage of rates at the current levels guarantees a historically favorable interest rate and protects against uncertainty surrounding future interest rate developments.
There’s a full week in the markets coming up, so stay tuned. Please let me know if you have any questions and thanks for taking the time to read this. I hope you find it useful and informative. Have a great week.
Fred
This Morning…Monday, December 14, 2009:
Treasuries and mortgages opened a little better this morning. Today there isn't any economic data to think about. At 9:30 the DJIA opened +30.
Last Week:
Mortgage bond prices were near unchanged last week holding mortgage rates steady. Trade was extremely volatile with swings throughout the week. The Treasury auctions were not as well received by foreign accounts as traders were hoping. The US relies on foreign central banks such as China to fund our deficit spending. If China were to decrease or cease purchasing US bonds and notes, rates would rise.
This Week:
It will be a busy pre-Christmas week for economic news. For one, the Fed meeting on Wednesday is expected to have no change for rates but, as usual, investors will be closely watching the language. The Producer Price Index (PPI) comes out tomorrow, as does Industrial Production and Capacity Utilization, and the Empire State Manufacturing Index. This is followed by the Consumer Price Index (CPI) and New Residential Construction on Wednesday. Housing Starts comes out Wednesday. Jobless Claims, Leading Economic Indicators, and the Philly Fed are on Thursday.
EconomicIndicator
Producer Price Index
Tuesday, Dec. 15,8:30 am, et
Up 0.9%,Core up 0.2%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Industrial Production
Tuesday, Dec. 15,9:15 am, et
Up 0.6%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Tuesday, Dec. 15,9:15 am, et
71.1%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
Housing Starts
Wednesday, Dec. 16,8:30 am, et
Up 8.6%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Consumer Price Index
Wednesday, Dec. 16,8:30 am, et
Up 0.7%,Core up 0.1%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Fed Meeting Adjourns
Wednesday, Dec. 16,2:15 pm, et
No rate change
Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.
Leading Economic Indicators
Thursday, Dec. 17,10:00 am, et
Up 0.7%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, Dec. 17,10:00 am, et
16.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Market Forecast:
Funds are essentially done for the year. Trade in markets is thinning daily, leading to the potential of continuing volatility on any surprises. We expect interest rate markets will continue to hang in a narrow range with not much change from where they trade today. This week the FOMC statement on Wednesday will likely cement rates into a tight range after the statement is chewed and a consensus forms as to what the Fed wants markets to accept. With economic improvement slowly but surely improving, markets will be keyed on what if anything it means to the Fed. Bernanke and most Fed officials have been stalwart on letting short term rates remain at zero for most of 2010, or at least until there is complete conviction job markets are stabilizing and some evidence jobs are being created. Although the Fed wants to be sure tightening rates won't lead to a double dip recession, there are a few regional Fed Presidents that are sounding more hawkish on rates. The concern is reacting too late may imbed inflation, and once ignited it becomes more difficult to control. This is the last week of the year where trading will have a modicum of volume
Some Humor:
Bob had finally made it to the last round of the $5,000,000 Question. The night before the big question, he told the M.C. that he desired a question on American History.
The big night had arrived. Bob made his way on stage in front of the studio and TV audience. He had become the talk of the week. He was the best guest this show had ever seen. The M.C. stepped up to the microphone.
"Bob, you have chosen American History as your final question. You know that if you correctly answer this question, you will walk away $5,000,000 dollars richer. Are you ready?"
Bob nodded with a cocky confidence-the crowd went nuts - he hadn't missed a question all week.
"Bob, your question on American History is a two-part question. As you know, you may answer either part first. As a rule, the second half of the question is always easier. Which part would you like to take a stab at first?"
Bob was now becoming more noticeably nervous. He couldn't believe it, but he was drawing a blank. American History was his easiest subject, but he played it safe. "I'll try the easier part first."
The M.C. nodded approvingly. "Here we go Bob. I will ask you the second half first, then the first half."
The audience silenced with gross anticipation . . .
"Bob, here is your question: And in what year did it happen??"
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
There’s a full week in the markets coming up, so stay tuned. Please let me know if you have any questions and thanks for taking the time to read this. I hope you find it useful and informative. Have a great week.
Fred
This Morning…Monday, December 14, 2009:
Treasuries and mortgages opened a little better this morning. Today there isn't any economic data to think about. At 9:30 the DJIA opened +30.
Last Week:
Mortgage bond prices were near unchanged last week holding mortgage rates steady. Trade was extremely volatile with swings throughout the week. The Treasury auctions were not as well received by foreign accounts as traders were hoping. The US relies on foreign central banks such as China to fund our deficit spending. If China were to decrease or cease purchasing US bonds and notes, rates would rise.
This Week:
It will be a busy pre-Christmas week for economic news. For one, the Fed meeting on Wednesday is expected to have no change for rates but, as usual, investors will be closely watching the language. The Producer Price Index (PPI) comes out tomorrow, as does Industrial Production and Capacity Utilization, and the Empire State Manufacturing Index. This is followed by the Consumer Price Index (CPI) and New Residential Construction on Wednesday. Housing Starts comes out Wednesday. Jobless Claims, Leading Economic Indicators, and the Philly Fed are on Thursday.
EconomicIndicator
Producer Price Index
Tuesday, Dec. 15,8:30 am, et
Up 0.9%,Core up 0.2%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Industrial Production
Tuesday, Dec. 15,9:15 am, et
Up 0.6%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Tuesday, Dec. 15,9:15 am, et
71.1%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
Housing Starts
Wednesday, Dec. 16,8:30 am, et
Up 8.6%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Consumer Price Index
Wednesday, Dec. 16,8:30 am, et
Up 0.7%,Core up 0.1%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Fed Meeting Adjourns
Wednesday, Dec. 16,2:15 pm, et
No rate change
Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.
Leading Economic Indicators
Thursday, Dec. 17,10:00 am, et
Up 0.7%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, Dec. 17,10:00 am, et
16.5
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Market Forecast:
Funds are essentially done for the year. Trade in markets is thinning daily, leading to the potential of continuing volatility on any surprises. We expect interest rate markets will continue to hang in a narrow range with not much change from where they trade today. This week the FOMC statement on Wednesday will likely cement rates into a tight range after the statement is chewed and a consensus forms as to what the Fed wants markets to accept. With economic improvement slowly but surely improving, markets will be keyed on what if anything it means to the Fed. Bernanke and most Fed officials have been stalwart on letting short term rates remain at zero for most of 2010, or at least until there is complete conviction job markets are stabilizing and some evidence jobs are being created. Although the Fed wants to be sure tightening rates won't lead to a double dip recession, there are a few regional Fed Presidents that are sounding more hawkish on rates. The concern is reacting too late may imbed inflation, and once ignited it becomes more difficult to control. This is the last week of the year where trading will have a modicum of volume
Some Humor:
Bob had finally made it to the last round of the $5,000,000 Question. The night before the big question, he told the M.C. that he desired a question on American History.
The big night had arrived. Bob made his way on stage in front of the studio and TV audience. He had become the talk of the week. He was the best guest this show had ever seen. The M.C. stepped up to the microphone.
"Bob, you have chosen American History as your final question. You know that if you correctly answer this question, you will walk away $5,000,000 dollars richer. Are you ready?"
Bob nodded with a cocky confidence-the crowd went nuts - he hadn't missed a question all week.
"Bob, your question on American History is a two-part question. As you know, you may answer either part first. As a rule, the second half of the question is always easier. Which part would you like to take a stab at first?"
Bob was now becoming more noticeably nervous. He couldn't believe it, but he was drawing a blank. American History was his easiest subject, but he played it safe. "I'll try the easier part first."
The M.C. nodded approvingly. "Here we go Bob. I will ask you the second half first, then the first half."
The audience silenced with gross anticipation . . .
"Bob, here is your question: And in what year did it happen??"
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Monday, November 30, 2009
Mortgage Market Review - 11/30/09
This Morning…Monday, November 30, 2009:
The United Arab Emirates since has come out saying it will lend money to the Dubai banks involved and that has settled things a little this morning. What UAE has not said however, is whether that central bank will stand with Dubai World, the island making venture that has ruin out of buyers. Estimates of the combined debt being default are ranging from $80B to $120B but no one really has a handle yet. The market is volatile this morning.
Last Week:
Interest rates improved slightly last week. The day prior to Thanksgiving, the results of the 7-year note were very strong, New Home Sales were up over 6% in October, much better than the drop that experts had forecast, and inventories shrank to about a 6.7 month supply at the current sales rate. Weekly jobless claims fell and for the first time in months total weekly claims were below 500K. We also had Consumer Spending pick up a little bit, which may give retailers a little hope for the upcoming buying season.
While here in the US we celebrated Thanksgiving the rest of the world went about business as usual; but it wasn't without a problem. Thursday Dubai announced it would ask for a moratorium on its outstanding debt, unable to pay for those grandiose ventures like an indoor snow ski resort in the middle of the desert and Dubai World. One more debt mess hitting. The reaction sent global equity markets down and a flight to safety in sovereign debt. Though US banks are not too involved in the Dubai crisis, most of Dubai's debt is held in Europe and the problem re-lights concern that debt problems are still out there and could re-surface at anytime.
This Week:
There is a heavy economic calendar this week with the Nov employment data bringing up the rear on Friday. Today we have the Chicago Purchasing Manager’s Survey at 9:45 EST. Tomorrow will be Construction Spending and ISM, Wednesday is the Fed’s Beige Book, Thursday Jobless Claims, and then on Friday is all of the unemployment data.
The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts. The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings. The report is used at the FOMC meetings, which tends to be one of the most influential events in the market. If the "Beige Book" shows signs of inflationary pressures, the Fed’s ability to keep rates lower may be somewhat restricted. However, if the report shows signs of difficulties, the Fed may keep rates low to stimulate the economy.
EconomicIndicator
Construction Spending
Tuesday, Dec. 1,10:00 am, et
Down 0.4%
Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
ISM Index
Tuesday, Dec. 1,10:00 am, et
54.8
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, Dec. 2,8:30 am, et
-155,000
Important. A measure of employment. Payroll weakness may bring lower rates.
Fed "Beige Book"
Wednesday, Dec. 2, 2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Revised Q3 Productivity
Thursday, Dec. 3,8:30 am, et
8.5%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Q4 Employment Cost Index
Thursday, Dec. 3,8:30 am, et
Up 0.4%
Very important. A measure of wage inflation. Weakness may lead to lower rates.
Employment
Friday, Dec. 4,8:30 am, et
Jobs -120,000Unemp @ 10.2%
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Factory Orders
Friday, Dec. 4,10:00 am, et
+0.2%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Market Forecast:
The employment report will be the most important release this week. This is one of those weeks where there are many economic releases classified as very important or important. The "Beige Book" release on Wednesday should provide market participants with valuable insight into what the Fed will do and how mortgage interest rates will respond in the short-term.
The potential for market volatility is increased when these types of reports are released. Be cautious heading into this and the other important releases this week.
Some Humor:
John was a salesman's delight when it came to any kind of unusual gimmick. One day he came home with another one of his unusual purchases: a robot that John claimed was actually a lie detector.
It was about 5:30 that afternoon when Tommy, their 11 year old son, returned home from school. Tommy was over 2 hours late.
“Where have you been? Why are you over 2 hours late getting home?” asked John.
“Several of us went to the library to work on an extra credit project,” said Tommy.
The robot then walked around the table and slapped Tommy, knocking him completely out of his chair.
“Son,” said John, “this robot is a lie detector, now tell us where you really were after school.”
“We went to Bobby's house and watched a movie,” said Tommy.
“What did you watch?” asked Marsha.
“The Ten Commandments.” answered Tommy. The robot went around to Tommy and once again slapped him, knocking him off his chair once more.
With his lip quivering, Tommy got up, sat down and said, “I am sorry I lied. We really watched a porno tape.'’
“I am ashamed of you son,” said John. “When I was your age, I never lied to my parents.”
The robot then walked around to John and delivered a whack that nearly knocked him out of his chair.
Marsha doubled over in laughter, almost in tears and said, “Boy, did you ever ask for that one! You can't be too mad with Tommy. After all, he is your son!”
With that the robot immediately walked around to Marsha and knocked her out of her chair.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
The United Arab Emirates since has come out saying it will lend money to the Dubai banks involved and that has settled things a little this morning. What UAE has not said however, is whether that central bank will stand with Dubai World, the island making venture that has ruin out of buyers. Estimates of the combined debt being default are ranging from $80B to $120B but no one really has a handle yet. The market is volatile this morning.
Last Week:
Interest rates improved slightly last week. The day prior to Thanksgiving, the results of the 7-year note were very strong, New Home Sales were up over 6% in October, much better than the drop that experts had forecast, and inventories shrank to about a 6.7 month supply at the current sales rate. Weekly jobless claims fell and for the first time in months total weekly claims were below 500K. We also had Consumer Spending pick up a little bit, which may give retailers a little hope for the upcoming buying season.
While here in the US we celebrated Thanksgiving the rest of the world went about business as usual; but it wasn't without a problem. Thursday Dubai announced it would ask for a moratorium on its outstanding debt, unable to pay for those grandiose ventures like an indoor snow ski resort in the middle of the desert and Dubai World. One more debt mess hitting. The reaction sent global equity markets down and a flight to safety in sovereign debt. Though US banks are not too involved in the Dubai crisis, most of Dubai's debt is held in Europe and the problem re-lights concern that debt problems are still out there and could re-surface at anytime.
This Week:
There is a heavy economic calendar this week with the Nov employment data bringing up the rear on Friday. Today we have the Chicago Purchasing Manager’s Survey at 9:45 EST. Tomorrow will be Construction Spending and ISM, Wednesday is the Fed’s Beige Book, Thursday Jobless Claims, and then on Friday is all of the unemployment data.
The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts. The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings. The report is used at the FOMC meetings, which tends to be one of the most influential events in the market. If the "Beige Book" shows signs of inflationary pressures, the Fed’s ability to keep rates lower may be somewhat restricted. However, if the report shows signs of difficulties, the Fed may keep rates low to stimulate the economy.
EconomicIndicator
Construction Spending
Tuesday, Dec. 1,10:00 am, et
Down 0.4%
Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
ISM Index
Tuesday, Dec. 1,10:00 am, et
54.8
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
ADP Employment
Wednesday, Dec. 2,8:30 am, et
-155,000
Important. A measure of employment. Payroll weakness may bring lower rates.
Fed "Beige Book"
Wednesday, Dec. 2, 2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Revised Q3 Productivity
Thursday, Dec. 3,8:30 am, et
8.5%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Q4 Employment Cost Index
Thursday, Dec. 3,8:30 am, et
Up 0.4%
Very important. A measure of wage inflation. Weakness may lead to lower rates.
Employment
Friday, Dec. 4,8:30 am, et
Jobs -120,000Unemp @ 10.2%
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Factory Orders
Friday, Dec. 4,10:00 am, et
+0.2%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Market Forecast:
The employment report will be the most important release this week. This is one of those weeks where there are many economic releases classified as very important or important. The "Beige Book" release on Wednesday should provide market participants with valuable insight into what the Fed will do and how mortgage interest rates will respond in the short-term.
The potential for market volatility is increased when these types of reports are released. Be cautious heading into this and the other important releases this week.
Some Humor:
John was a salesman's delight when it came to any kind of unusual gimmick. One day he came home with another one of his unusual purchases: a robot that John claimed was actually a lie detector.
It was about 5:30 that afternoon when Tommy, their 11 year old son, returned home from school. Tommy was over 2 hours late.
“Where have you been? Why are you over 2 hours late getting home?” asked John.
“Several of us went to the library to work on an extra credit project,” said Tommy.
The robot then walked around the table and slapped Tommy, knocking him completely out of his chair.
“Son,” said John, “this robot is a lie detector, now tell us where you really were after school.”
“We went to Bobby's house and watched a movie,” said Tommy.
“What did you watch?” asked Marsha.
“The Ten Commandments.” answered Tommy. The robot went around to Tommy and once again slapped him, knocking him off his chair once more.
With his lip quivering, Tommy got up, sat down and said, “I am sorry I lied. We really watched a porno tape.'’
“I am ashamed of you son,” said John. “When I was your age, I never lied to my parents.”
The robot then walked around to John and delivered a whack that nearly knocked him out of his chair.
Marsha doubled over in laughter, almost in tears and said, “Boy, did you ever ask for that one! You can't be too mad with Tommy. After all, he is your son!”
With that the robot immediately walked around to Marsha and knocked her out of her chair.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
11/25/09
Good morning. Anyone have gold to sell? It hit another high on dollar weakness, nearing $1,200 per ounce!!! Today there are many economic numbers to digest. Personal Income and Consumption, Durable Goods, Housing Starts and Building Permits and New Home Sales.
Jobless Claims dropped 35,000 last week, which surprised forecasters. The surprising decline in unemployment claims overshadowed two other 8:30 reports; Oct personal income increased slightly and spending was up 0.7%. Oct durable goods orders fell slightly. Without the claims data the decline in orders would be seen as a negative; however durables is a very volatile series so traders tend to pay it less attention.
Finally today (and the rest of the week) Oct new home sales were forecast to be up 0.8%, but sales jumped 6.2%. There is a 6.7 month supply based on current sales, the lowest level since 12/06. The median sales price at $212,200 is 0.5% lower on a yr/yr basis. The report sent stock indexes higher.
To wrap up the week; at 1:00 7 yr notes will be auctioned. Likely won't be as well bid as the 2 and 5 yr notes but shouldn't be a failure either. The market is closed tomorrow and open until 1:00 on Friday but not many will be in place. Yesterday and Monday the volume at the NYSE was extremely low, today will likely be the same as investors and traders are winding down for the rest of the year. Many funds have already buttoned up for the year to protect the profits earned this year.
After all this mortgages rates are about unchanged.
Once again, I would like to wish all of you a very happy Thanksgiving. I hope you have a wonderful holiday. I’ll be in touch on Monday the 30th.
Jobless Claims dropped 35,000 last week, which surprised forecasters. The surprising decline in unemployment claims overshadowed two other 8:30 reports; Oct personal income increased slightly and spending was up 0.7%. Oct durable goods orders fell slightly. Without the claims data the decline in orders would be seen as a negative; however durables is a very volatile series so traders tend to pay it less attention.
Finally today (and the rest of the week) Oct new home sales were forecast to be up 0.8%, but sales jumped 6.2%. There is a 6.7 month supply based on current sales, the lowest level since 12/06. The median sales price at $212,200 is 0.5% lower on a yr/yr basis. The report sent stock indexes higher.
To wrap up the week; at 1:00 7 yr notes will be auctioned. Likely won't be as well bid as the 2 and 5 yr notes but shouldn't be a failure either. The market is closed tomorrow and open until 1:00 on Friday but not many will be in place. Yesterday and Monday the volume at the NYSE was extremely low, today will likely be the same as investors and traders are winding down for the rest of the year. Many funds have already buttoned up for the year to protect the profits earned this year.
After all this mortgages rates are about unchanged.
Once again, I would like to wish all of you a very happy Thanksgiving. I hope you have a wonderful holiday. I’ll be in touch on Monday the 30th.
11/24/09
Good morning. Yesterday’s 2-yr sale didn’t move the markets much. The overall demand for the 2-yr note was lower than last month’s auction.
The Existing Home Sales number was up over 10% and hitting the highest level in almost three years. We all knew that there would be a “first time home buyer tax credit ending” crunch, but it exceeded what experts had forecast. Inventories of previously owned homes decreased by 3.7% - that represented a 7-month supply at the current sales pace, with median prices down 7.1% a year ago. Regionally, sales in October compared to September rose 11.6% in the Northeast, 14.4% in the Midwest, 12.7% in the South, and 1.6% in the West.
We learned this morning that U.S. economy grew more slowly than initially thought in the third quarter. The second reading of 3rd quarter GDP showed 2.8 percent annual increase rather than the 3.5 percent pace it estimated last month and a touch below the 2.9% expected. Although we have another auction ahead of us, after the GDP news we find mortgage prices slightly better.
The Existing Home Sales number was up over 10% and hitting the highest level in almost three years. We all knew that there would be a “first time home buyer tax credit ending” crunch, but it exceeded what experts had forecast. Inventories of previously owned homes decreased by 3.7% - that represented a 7-month supply at the current sales pace, with median prices down 7.1% a year ago. Regionally, sales in October compared to September rose 11.6% in the Northeast, 14.4% in the Midwest, 12.7% in the South, and 1.6% in the West.
We learned this morning that U.S. economy grew more slowly than initially thought in the third quarter. The second reading of 3rd quarter GDP showed 2.8 percent annual increase rather than the 3.5 percent pace it estimated last month and a touch below the 2.9% expected. Although we have another auction ahead of us, after the GDP news we find mortgage prices slightly better.
Monday, November 23, 2009
Mortgage Marketr Review - 11/23/09
This Morning…Monday, November 23, 2009:
At 10:00 Oct existing home sales were up 10.1% which was much higher than expected. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from October, 2008. There has been no immediate reaction to the 10:00 report in the mortgage markets, but the DJIA jumped about 20 points from pre report levels.
Last Week:
Mortgage rates lowered slightly last week. Mixed data resulted in up and down trading but within a relatively narrow range. Things were going well the first part of the week with rates improving until Wednesday when the consumer price index and the core came in higher than expected. Inflation, real or perceived, erodes the value of fixed income investments causing prices to fall and rates to rise. We saw some of that mid-week. In FED Chief Bernanke's speech on Monday to the NY Economics Club he reiterated he would keep rates low; essentially admitted he has little insight as to how the economic recovery will unfold and remarked "The best thing we can say about the labor market right now is that it may be getting worse more slowly." In layman speak, he isn't sure the unemployment situation is at its bottom.
This Week:
There is a decent amount of economic data to be released this week. Today is Existing Home Sales (see information above). Tomorrow we have GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting. Wednesday, when everyone would rather be somewhere else, we have Durable Goods Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment. Add on the Treasury auctions today through Wednesday, and many traders off for the week, and we have a recipe for volatility.
EconomicIndicator
Existing Home Sales
Monday, Nov. 23,10:00 am, et
Down 0.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Preliminary 3Q GDP
Tuesday, Nov. 24,8:30 am, et
Up 3.0%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Nov. 24,10:00 am, et
47.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Wednesday, Nov. 25,8:30 am, et
Up 0.2%,Up 0.5%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation
Wednesday, Nov. 25,8:30 am, et
Up 0.1%
Important. A measure of price increases for all domestic personal consumption. Weakness may help rates improve.
Durable Goods Orders
Wednesday, Nov. 25,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Nov. 25,10:00 am, et
66.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Nov. 25,10:00 am, et
Up 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Market Forecast:
Look for increased volatility this week with thin volume. There are a lot of reports due in a shortened week. Plain and simple.
Some Humor:
Recently I received a parrot as a gift. The parrot had a bad attitude and an even worse vocabulary. Every word out of the bird's mouth was rude, obnoxious and laced with profanity.
I tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else I could think of to "clean up" the bird's vocabulary.
Finally, I was fed up and I yelled at the parrot.
The parrot yelled back.I shook the parrot and the parrot got angrier and even ruder. So, in desperation, I threw up my hands, grabbed the bird and put him in the freezer.
For a few minutes the parrot squawked and kicked and screamed.
Then suddenly there was total quiet.Not a peep was heard for over a minute.
Fearing that I'd hurt the parrot, I quickly opened the door to the freezer.
The parrot calmly stepped out onto my outstretched arms and said, "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."I was stunned at the change in the bird's attitude.
As I was about to ask the parrot what had made such a dramatic change in his behavior, the bird continued,
"May I ask what the turkey did?"
Once again…I hope you have a wonderful Thanksgiving!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
At 10:00 Oct existing home sales were up 10.1% which was much higher than expected. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from October, 2008. There has been no immediate reaction to the 10:00 report in the mortgage markets, but the DJIA jumped about 20 points from pre report levels.
Last Week:
Mortgage rates lowered slightly last week. Mixed data resulted in up and down trading but within a relatively narrow range. Things were going well the first part of the week with rates improving until Wednesday when the consumer price index and the core came in higher than expected. Inflation, real or perceived, erodes the value of fixed income investments causing prices to fall and rates to rise. We saw some of that mid-week. In FED Chief Bernanke's speech on Monday to the NY Economics Club he reiterated he would keep rates low; essentially admitted he has little insight as to how the economic recovery will unfold and remarked "The best thing we can say about the labor market right now is that it may be getting worse more slowly." In layman speak, he isn't sure the unemployment situation is at its bottom.
This Week:
There is a decent amount of economic data to be released this week. Today is Existing Home Sales (see information above). Tomorrow we have GDP, Consumer Confidence, and the FOMC Minutes from the November 4th Fed meeting. Wednesday, when everyone would rather be somewhere else, we have Durable Goods Orders, Personal Income, Core PCE inflation, New Home Sales, and Consumer Sentiment. Add on the Treasury auctions today through Wednesday, and many traders off for the week, and we have a recipe for volatility.
EconomicIndicator
Existing Home Sales
Monday, Nov. 23,10:00 am, et
Down 0.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Preliminary 3Q GDP
Tuesday, Nov. 24,8:30 am, et
Up 3.0%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Nov. 24,10:00 am, et
47.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Personal Income and Outlays
Wednesday, Nov. 25,8:30 am, et
Up 0.2%,Up 0.5%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation
Wednesday, Nov. 25,8:30 am, et
Up 0.1%
Important. A measure of price increases for all domestic personal consumption. Weakness may help rates improve.
Durable Goods Orders
Wednesday, Nov. 25,8:30 am, et
Up 0.5%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Wednesday, Nov. 25,10:00 am, et
66.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales
Wednesday, Nov. 25,10:00 am, et
Up 2.9%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Market Forecast:
Look for increased volatility this week with thin volume. There are a lot of reports due in a shortened week. Plain and simple.
Some Humor:
Recently I received a parrot as a gift. The parrot had a bad attitude and an even worse vocabulary. Every word out of the bird's mouth was rude, obnoxious and laced with profanity.
I tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else I could think of to "clean up" the bird's vocabulary.
Finally, I was fed up and I yelled at the parrot.
The parrot yelled back.I shook the parrot and the parrot got angrier and even ruder. So, in desperation, I threw up my hands, grabbed the bird and put him in the freezer.
For a few minutes the parrot squawked and kicked and screamed.
Then suddenly there was total quiet.Not a peep was heard for over a minute.
Fearing that I'd hurt the parrot, I quickly opened the door to the freezer.
The parrot calmly stepped out onto my outstretched arms and said, "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."I was stunned at the change in the bird's attitude.
As I was about to ask the parrot what had made such a dramatic change in his behavior, the bird continued,
"May I ask what the turkey did?"
Once again…I hope you have a wonderful Thanksgiving!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, November 13, 2009
11/13/09
Good morning. This morning we found out that the U.S. trade deficit widened in September by an unexpectedly large 18.2%, the most in more than 10 years. Most of the widening was attributed to oil prices (up for the 7th straight month) and imports from China. Both U.S. exports and imports had their best month since December 2008, with imports growing 5.8% and exports rising 2.9% which points to some economic growth here in the US. Moving on to October, U.S. import prices rose for the third straight month, up .7%. After the news we find mortgage rates slightly better.
I’ll be out of the office from Friday afternoon (11/13) and returning on Monday (11/23). I will be available on my Blackberry for email and cell as much as my wife will allow. The number is 425-268-7003. I am hoping to continue the updates while I’m gone, but am uncertain about the internet capability. Thanks
I’ll be out of the office from Friday afternoon (11/13) and returning on Monday (11/23). I will be available on my Blackberry for email and cell as much as my wife will allow. The number is 425-268-7003. I am hoping to continue the updates while I’m gone, but am uncertain about the internet capability. Thanks
11/12/09
Good morning. I hope you had a nice Veteran’s Day holiday. Fixed-income markets, which were closed yesterday in spite of the equity markets being open. The results of the 10-year note were “solid”. The auction came slightly below average.
Today we will have a $16 billion 30-yr bond auction (currently at a yield of 4.40%). We have already found out that Jobless Claims fell for the second week in a row and the four-week moving average of claims was the lowest in nearly a year. After the news we find our friend the mortgage rates roughly unchanged.
Today we will have a $16 billion 30-yr bond auction (currently at a yield of 4.40%). We have already found out that Jobless Claims fell for the second week in a row and the four-week moving average of claims was the lowest in nearly a year. After the news we find our friend the mortgage rates roughly unchanged.
11/10/09
Yesterday (Monday) we saw the equity markets rally nicely. Helping the interest rate markets was a record $40 billion 3-yr Treasury auction that went well.
There is no data but we do get three Fed officials today; Lockhart (Atlanta Fed President) already this morning saying unemployment will stay high for a long time. Not news but reiterating the rationale that the Fed will keep interest rates low for much of 2010. We caution however, not to take the meaning that mortgage rates or long term treasuries will stay low. The Fed will likely keep the Federal Funds rate low but market factors could drive long term rates up while short rates stay firm.
Let me know if you have any questions.
There is no data but we do get three Fed officials today; Lockhart (Atlanta Fed President) already this morning saying unemployment will stay high for a long time. Not news but reiterating the rationale that the Fed will keep interest rates low for much of 2010. We caution however, not to take the meaning that mortgage rates or long term treasuries will stay low. The Fed will likely keep the Federal Funds rate low but market factors could drive long term rates up while short rates stay firm.
Let me know if you have any questions.
Monday, November 9, 2009
Mortgage Market Review - 11/9/09
Good morning. As you probably know, the tax credit for new home purchases has been extended and enhanced to other than 1st time homebuyers. This is of course, really good news. I have seen nothing that it will be retroactive, so the “go” date is Dec 1. People buying a home for the first time in three years would receive an $8,000 tax credit if they sign a contract by April 30 and close by June 30. Homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit beginning Dec. 1 if they owned their home for five consecutive years in the previous eight. The income caps are $125k for individuals and $225 for couples. Anyone who collects the tax credit but sells the home within three years of buying it must return the refund.
Check out this site for more details: http://money.cnn.com/2009/11/06/real_estate/tax_credit_extended/?postversion=2009110615
This Morning…Monday, November 9, 2009:
The markets have started quietly this morning. At 8:30 mortgage rates are unchanged from Friday and the Dow is + 70. The dollar is getting hit hard again this morning; stocks are rallying, crude oil higher and gold up----all a function of the dollar's decline. All of this has been a good thing for the equities and rate markets. There won’t be much happening today so mortgage rates should take their lead from selling in the stock market.
Last Week:
Mortgage bond prices were near unchanged for the week amid very choppy trading conditions. Stronger than expected factory orders and ISM Index data were generally not bond friendly and attributed to higher rates in the middle of the week. Fortunately on Wednesday, the Fed indicated the continued desire to keep rates low for an extended period. In addition on Friday, higher than expected unemployment (10.2%!!) and more payroll losses than expected helped mortgage bonds rally Friday. For the week and after the dust settled, interest rates finished near unchanged.
This Week:
The record debt auctions Monday, Tuesday, and Thursday will once again take center stage as the Veterans holiday Wednesday splits the trading week in half. Strong foreign demand remains necessary for interest rates to stay relatively low. The dollar decline is the key that attracts foreign demand, as long as the dollar continues its slide traders won't worry too much about the auctions. On Thursday we have Jobless Claims (expected to be unchanged), and on Friday we have some Trade Balance figures along with some import and export price measures, and the preliminary University of Michigan Consumer Sentiment survey. The trade data Friday will be important.
EconomicIndicator
3-year Treasury Note Auction
Monday, Nov. 9,12:00 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Tuesday, Nov. 10,12:00 pm, et
None
Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Veterans Day
Wednesday, Nov. 11
Important. Shortened trading week may lead to mortgage interest rate volatility.
30-year Treasury Bond Auction
Thursday, Nov. 12,12:00 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Friday, Nov. 13,8:30 am, et
$31.9 billion
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Nov. 13,10:00 am, et
71.8
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
This week we have the Veteran’s Day holiday. Shortened trading weeks have the potential to compress a week’s worth of trading into fewer days and traders often take defensive positions ahead of weekends and holidays to guard against unforeseen events that could possibly jeopardize their investments. This positioning can be beneficial or detrimental to mortgage interest rates. If investors sell stocks and buy mortgage-backed securities, mortgage interest rates will improve. However, if investors sell mortgage-backed securities and hold cash positions, mortgage interest rates will rise. A cautious approach to interest rate exposure is prudent. Overall, we are still not expecting rates to decline much as long as investors continue to believe the economic outlook is positive; to push rates lower will require a major change in sentiment on the economic outlook.
Some Humor:
It was entertainment night at the Senior Center.
Claude the hypnotist exclaimed: "I'm here to put you into a trance; I intend to hypnotize each and every member of the audience."
The excitement was almost electric as Claude withdrew a beautiful antique pocket watch from his coat.
"I want you each to keep your eye on this antique watch - it's a very special watch. It's been in my family for six generations."
He began to swing the watch gently back and forth while quietly chanting, "Watch the watch, watch the watch, watch the watch..."
The crowd became mesmerized as the watch swayed back and forth, light gleaming off its polished surface Hundreds of pairs of eyes followed the swaying watch when suddenly it slipped from the hypnotist's fingers and fell to the floor, breaking into a hundred pieces.
"S---!" yelled the Hypnotist.
It took three days to clean up the Senior Center.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Check out this site for more details: http://money.cnn.com/2009/11/06/real_estate/tax_credit_extended/?postversion=2009110615
This Morning…Monday, November 9, 2009:
The markets have started quietly this morning. At 8:30 mortgage rates are unchanged from Friday and the Dow is + 70. The dollar is getting hit hard again this morning; stocks are rallying, crude oil higher and gold up----all a function of the dollar's decline. All of this has been a good thing for the equities and rate markets. There won’t be much happening today so mortgage rates should take their lead from selling in the stock market.
Last Week:
Mortgage bond prices were near unchanged for the week amid very choppy trading conditions. Stronger than expected factory orders and ISM Index data were generally not bond friendly and attributed to higher rates in the middle of the week. Fortunately on Wednesday, the Fed indicated the continued desire to keep rates low for an extended period. In addition on Friday, higher than expected unemployment (10.2%!!) and more payroll losses than expected helped mortgage bonds rally Friday. For the week and after the dust settled, interest rates finished near unchanged.
This Week:
The record debt auctions Monday, Tuesday, and Thursday will once again take center stage as the Veterans holiday Wednesday splits the trading week in half. Strong foreign demand remains necessary for interest rates to stay relatively low. The dollar decline is the key that attracts foreign demand, as long as the dollar continues its slide traders won't worry too much about the auctions. On Thursday we have Jobless Claims (expected to be unchanged), and on Friday we have some Trade Balance figures along with some import and export price measures, and the preliminary University of Michigan Consumer Sentiment survey. The trade data Friday will be important.
EconomicIndicator
3-year Treasury Note Auction
Monday, Nov. 9,12:00 pm, et
None
Important. $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Tuesday, Nov. 10,12:00 pm, et
None
Important. $25 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Veterans Day
Wednesday, Nov. 11
Important. Shortened trading week may lead to mortgage interest rate volatility.
30-year Treasury Bond Auction
Thursday, Nov. 12,12:00 pm, et
None
Important. $16 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Friday, Nov. 13,8:30 am, et
$31.9 billion
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Nov. 13,10:00 am, et
71.8
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
This week we have the Veteran’s Day holiday. Shortened trading weeks have the potential to compress a week’s worth of trading into fewer days and traders often take defensive positions ahead of weekends and holidays to guard against unforeseen events that could possibly jeopardize their investments. This positioning can be beneficial or detrimental to mortgage interest rates. If investors sell stocks and buy mortgage-backed securities, mortgage interest rates will improve. However, if investors sell mortgage-backed securities and hold cash positions, mortgage interest rates will rise. A cautious approach to interest rate exposure is prudent. Overall, we are still not expecting rates to decline much as long as investors continue to believe the economic outlook is positive; to push rates lower will require a major change in sentiment on the economic outlook.
Some Humor:
It was entertainment night at the Senior Center.
Claude the hypnotist exclaimed: "I'm here to put you into a trance; I intend to hypnotize each and every member of the audience."
The excitement was almost electric as Claude withdrew a beautiful antique pocket watch from his coat.
"I want you each to keep your eye on this antique watch - it's a very special watch. It's been in my family for six generations."
He began to swing the watch gently back and forth while quietly chanting, "Watch the watch, watch the watch, watch the watch..."
The crowd became mesmerized as the watch swayed back and forth, light gleaming off its polished surface Hundreds of pairs of eyes followed the swaying watch when suddenly it slipped from the hypnotist's fingers and fell to the floor, breaking into a hundred pieces.
"S---!" yelled the Hypnotist.
It took three days to clean up the Senior Center.
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, November 6, 2009
11/6/09
Good morning. Tomorrow morning the headlines will all read, “Unemployment Rate hits 26 year high at 10.2%”. Nonfarm Payroll was worse than expected and payrolls have declined for 22 consecutive months now – and even many who are back at work are either “under-employed” – working part time, or not making as much as they were. Manufacturing employment fell, construction was down, the service-providing sector cut 61k and goods-producing industries cut 129k. How will we have a recovery with those numbers? As one would expect, stocks fell on the news and bonds have rallied: Mortgage prices are a bit better this morning.
Yesterday the House voted 403-12 to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it today. “Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30. The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.”
http://www.google.com/hostednews/ap/article/ALeqM5hJJraNRE6DjWj2orF7SYJ12PADEAD9BPISHG0
Have a great weekend.
Yesterday the House voted 403-12 to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it today. “Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30. The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.”
http://www.google.com/hostednews/ap/article/ALeqM5hJJraNRE6DjWj2orF7SYJ12PADEAD9BPISHG0
Have a great weekend.
11/5/09
Good morning. The Senate passed the bill extending the home buyers tax credit and adding 14 weeks to unemployment insurance; it goes to the House for quick passage then to Obama for a TV extravaganza signing event.
As was expected, the FOMC kept its central message and the Fed Funds rate unchanged, noting that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." What are Fed Funds? These are cash balances held by banks with their local Federal Reserve Bank, typically involved in an “inter-bank sale” of a Fed fund deposit for one business day - overnight. And the Fed Funds Rate is the overnight interest rate charged by those banks with excess reserves on hand. Why would this impact the mortgage rate that you pay on your mortgage? They don’t, since the credit profile of a borrower, or house, is more complicated and riskier than a bank with excess funds, and an overnight rate is obviously different than a 30 year rate.
Yesterday, however, in addition to the Fed announcement, Treasury officials announced a record refunding package for next week. Sales include $40 billion in 3-year notes, $25 billion 10-year notes, and a $16 billion 30- year bonds to be held on Monday, Tuesday and Thursday. (Wednesday is a holiday.) For economic news we had Jobless Claims. Claims for jobless insurance hit a 10-month low. Tomorrow, of course, the Labor Department is expected to report that the decline in employment is slowing and that payrolls fell in October, compared to September. Currently mortgage prices are about the same as yesterday. With employment tomorrow look for generally quiet trade today in both stocks and bonds
As was expected, the FOMC kept its central message and the Fed Funds rate unchanged, noting that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." What are Fed Funds? These are cash balances held by banks with their local Federal Reserve Bank, typically involved in an “inter-bank sale” of a Fed fund deposit for one business day - overnight. And the Fed Funds Rate is the overnight interest rate charged by those banks with excess reserves on hand. Why would this impact the mortgage rate that you pay on your mortgage? They don’t, since the credit profile of a borrower, or house, is more complicated and riskier than a bank with excess funds, and an overnight rate is obviously different than a 30 year rate.
Yesterday, however, in addition to the Fed announcement, Treasury officials announced a record refunding package for next week. Sales include $40 billion in 3-year notes, $25 billion 10-year notes, and a $16 billion 30- year bonds to be held on Monday, Tuesday and Thursday. (Wednesday is a holiday.) For economic news we had Jobless Claims. Claims for jobless insurance hit a 10-month low. Tomorrow, of course, the Labor Department is expected to report that the decline in employment is slowing and that payrolls fell in October, compared to September. Currently mortgage prices are about the same as yesterday. With employment tomorrow look for generally quiet trade today in both stocks and bonds
11/4/09
Good morning. The markets saw some volatility yesterday, with the stock market coming off its lows. Nonetheless, both the DOW and the bond market finished the day down. Factory Orders were up in September, the fifth increase in a row. One area of concern is obviously the Fed’s continued purchase of mortgage securities, thus keeping prices high, rates low. The government is slated to end its purchases of mortgage securities in the first quarter of 2010 and some analysts are predicting that this will add as much as a full percentage point to mortgage rates.
Today could be interesting. Not only will the Treasury announce how much it plans a rise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%. With all this in mind, mortgage prices are slightly worse this morning. Let me know if you have any questions.
Today could be interesting. Not only will the Treasury announce how much it plans a rise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%. With all this in mind, mortgage prices are slightly worse this morning. Let me know if you have any questions.
11/3/09
Good morning. Yesterday we saw Construction Spending rise .8% in September, the biggest gain in a year, the ISM Factory Index come in well above forecasts, and Pending Sales of existing homes here in the US rise over 6% in September. These “pending sales” are up almost 20% versus a year ago, which many attribute to the tax credit and “really good” prices on the low end. The FOMC meeting begins today, with the announcement tomorrow at 2:15PM EST with no change expected rates, but perhaps they tweak the language. The Fed may try to find a way of talking about what the conditions are under which interest rates would rise rather than simply pretending that there are no conditions under which rates would go up." So far this morning mortgages rates are a smidge better. We are expecting another quiet day for the bond and mortgage markets.
Monday, November 2, 2009
Mortgage Market Review - 11/2/09
Good morning. Although there is widespread support in Congress for extending the life of a home-buyer tax credit scheduled to expire at the end of this month, there is still nothing to report. Hopefully the entire industry doesn’t hinge on the result, but an extension is expected soon as Congress still hasn't finished work on the legislation. As many who have survived because of it know, the credit amount is 10% of a home's purchase price, with a maximum of $8,000 for a single taxpayer and a married couple filing a joint return. Eligible taxpayers will get the credit even if they don't owe any tax, or if the credit is more than the tax they owe for 2008 or 2009. Please let me know if you have any questions about this. Thanks for taking the time to read this over. I hope you find it useful and informative.
This Morning…Monday, November 2, 2009:
Treasuries and mortgages opened a little softer this morning after the strong rally Friday. There were three economic readings this morning. The most significant, Oct manufacturing index was better than expected, Sept construction spending was up more than expected and Sept pending home sales jumped 6.1%, the eighth month in a row pending sales have increased. As a result, treasury and mortgage rates are slightly higher this morning.
Last Week:
It was a good week for the interest rate markets after a number of tough days. Treasury once again successfully sold $123B of notes in four auctions. Consumer confidence measured by The Conference Board declined more than expected, implying consumers may not be as convinced of a recovery as the equity markets. Personal spending in Sept declined, new home sales were expected to be up slightly in Sept but declined 3.6%. Finally the stock market ended the week on what looks like the beginning of the long over-due correction that even the most bullish have been expecting for the past month. The DJIA declined 259 points last week and the rate markets benefited.
This Week:
We have yet another full slate of economic news this week. We begin slowly with "second tier" numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday. So although overnight rates, which don’t directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Stay tuned.
EconomicIndicator
ISM Index
Monday, Nov. 2,10:00 am, et
53.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, Nov. 3,10:00 am, et
Up 1.0%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, Nov. 4,8:30 am, et
Down 190k
Important. An indication of unemployment. A larger decrease in payrolls may bring lower rates.
Fed Meeting Adjourns
Wednesday, Nov. 4,2:15 pm, et
No rate change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Preliminary Q3 Productivity
Thursday, Nov. 5,8:30 am, et
Up 5.8%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, Nov. 6,8:30 am, et
Unemp. @ 9.9%,Payrolls -166k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
The likeliness of mortgage interest rate volatility this week is very high considering the abundance of important economic releases. The Fed meeting on Wednesday will be the most important event this week. Productivity and employment figures are likely to move the market.
Each piece of data this week has the ability to cause volatility in the financial markets. It is possible for interest rates to improve if the data shows weakness in the economy with few price pressures. However, any surprises will likely be bad for mortgage interest rates. The important thing to remember is that even the Treasury officials trying to shore the economy do not know exactly what the future holds. With this in mind, be cautious during these times of economic uncertainty and be ready in the event interest rates start to spike higher.
Some Humor:
A small zoo in Arkansas obtained a very rare species of gorilla. Within a few weeks the gorilla, a female, became very difficult to handle. Upon examination, the veterinarian determined the problem. The gorilla was in heat. To make matters worse, there was no male gorilla available. Thinking about their problem, the Zoo Keeper thought of Billy Bob Burnett, a redneck part-time worker responsible for cleaning the turtle cages. Billy Bob, had little sense but possessed ample ability to satisfy a female of any species. The Zoo Keeper thought they might have a solution. Billy Bob was approached with a proposition. Would he be willing to mate with the gorilla for $500?
Billy Bob showed some interest, but said he would have to think the matter over carefully. The following day, he announced that he would accept their offer, but only under five conditions: "First", Billy Bob said, "I ain't gonna kiss her on the lips." The keeper quickly agreed to this condition.
"Second", he said, "She must wear a 'Dale Earnhardt Forever' T-Shirt." The keeper again readily agreed to this condition.
"Third", he said, "you can't never tell no one about this." The keeper again readily agreed to this condition.
"Fourth", Billy Bob said, "I want all the children raised Southern Baptist." Once again it was agreed.
"And last," Billy Bob said, "I'll need another week to come up with the $500.00."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
This Morning…Monday, November 2, 2009:
Treasuries and mortgages opened a little softer this morning after the strong rally Friday. There were three economic readings this morning. The most significant, Oct manufacturing index was better than expected, Sept construction spending was up more than expected and Sept pending home sales jumped 6.1%, the eighth month in a row pending sales have increased. As a result, treasury and mortgage rates are slightly higher this morning.
Last Week:
It was a good week for the interest rate markets after a number of tough days. Treasury once again successfully sold $123B of notes in four auctions. Consumer confidence measured by The Conference Board declined more than expected, implying consumers may not be as convinced of a recovery as the equity markets. Personal spending in Sept declined, new home sales were expected to be up slightly in Sept but declined 3.6%. Finally the stock market ended the week on what looks like the beginning of the long over-due correction that even the most bullish have been expecting for the past month. The DJIA declined 259 points last week and the rate markets benefited.
This Week:
We have yet another full slate of economic news this week. We begin slowly with "second tier" numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday. So although overnight rates, which don’t directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Stay tuned.
EconomicIndicator
ISM Index
Monday, Nov. 2,10:00 am, et
53.0
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Factory Orders
Tuesday, Nov. 3,10:00 am, et
Up 1.0%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
ADP Employment
Wednesday, Nov. 4,8:30 am, et
Down 190k
Important. An indication of unemployment. A larger decrease in payrolls may bring lower rates.
Fed Meeting Adjourns
Wednesday, Nov. 4,2:15 pm, et
No rate change
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Preliminary Q3 Productivity
Thursday, Nov. 5,8:30 am, et
Up 5.8%
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Employment
Friday, Nov. 6,8:30 am, et
Unemp. @ 9.9%,Payrolls -166k
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Market Forecast:
The likeliness of mortgage interest rate volatility this week is very high considering the abundance of important economic releases. The Fed meeting on Wednesday will be the most important event this week. Productivity and employment figures are likely to move the market.
Each piece of data this week has the ability to cause volatility in the financial markets. It is possible for interest rates to improve if the data shows weakness in the economy with few price pressures. However, any surprises will likely be bad for mortgage interest rates. The important thing to remember is that even the Treasury officials trying to shore the economy do not know exactly what the future holds. With this in mind, be cautious during these times of economic uncertainty and be ready in the event interest rates start to spike higher.
Some Humor:
A small zoo in Arkansas obtained a very rare species of gorilla. Within a few weeks the gorilla, a female, became very difficult to handle. Upon examination, the veterinarian determined the problem. The gorilla was in heat. To make matters worse, there was no male gorilla available. Thinking about their problem, the Zoo Keeper thought of Billy Bob Burnett, a redneck part-time worker responsible for cleaning the turtle cages. Billy Bob, had little sense but possessed ample ability to satisfy a female of any species. The Zoo Keeper thought they might have a solution. Billy Bob was approached with a proposition. Would he be willing to mate with the gorilla for $500?
Billy Bob showed some interest, but said he would have to think the matter over carefully. The following day, he announced that he would accept their offer, but only under five conditions: "First", Billy Bob said, "I ain't gonna kiss her on the lips." The keeper quickly agreed to this condition.
"Second", he said, "She must wear a 'Dale Earnhardt Forever' T-Shirt." The keeper again readily agreed to this condition.
"Third", he said, "you can't never tell no one about this." The keeper again readily agreed to this condition.
"Fourth", Billy Bob said, "I want all the children raised Southern Baptist." Once again it was agreed.
"And last," Billy Bob said, "I'll need another week to come up with the $500.00."
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, October 30, 2009
10/30/09
Good morning. Most of the United States begins Daylight Saving Time at 2:00 a.m. on the second Sunday in March and reverts to standard time on the first Sunday in November. So by my calculations, that means that this Sunday here in the U.S. most of us “fall back” and it will dark by dinner time.
There is a great deal of news today, so we could see some continued volatility. We have already seen Personal Income and Consumption (Spending). U.S. consumer spending, as expected, fell in September for the first time in five months. Personal income was flat last month after rising slightly in August, also as expected. Later we have the Chicago Purchasing Manager’s Survey, along with a revision to the Michigan Consumer Sentiment numbers. After the news we find mortgages a shade better.
Have a great weekend
There is a great deal of news today, so we could see some continued volatility. We have already seen Personal Income and Consumption (Spending). U.S. consumer spending, as expected, fell in September for the first time in five months. Personal income was flat last month after rising slightly in August, also as expected. Later we have the Chicago Purchasing Manager’s Survey, along with a revision to the Michigan Consumer Sentiment numbers. After the news we find mortgages a shade better.
Have a great weekend
10/29/09
Good morning. Early this morning mortgage rates started slightly weaker after two strong days of price gains as the stock market improved. At 9:30 the DJIA opened +60 and mortgage prices were slightly worsened.
Weekly jobless claims were down this morning, but not as much of a decline as expected. Declining continuing claims would normally be a positive for the employment outlook if this were a normal recession. Not the case; continuing claims are likely declining as unemployment benefits are ending for many that lost jobs six months ago with no extension from the Obama administration. The take away from the claims data today, as is the case every week, 500K+ a week are losing jobs and has been going on for all of this year. Job losses at 2 mil a month isn't a building block for economic recovery no matter how it is spun. Lipstick on the pig isn't enough to take it to the prom. Also at 8:30 the first look at Q3 GDP was better than expected. The better growth triggered buying in the stock index futures and drove the stock market to a better open at 9:30.
Weekly jobless claims were down this morning, but not as much of a decline as expected. Declining continuing claims would normally be a positive for the employment outlook if this were a normal recession. Not the case; continuing claims are likely declining as unemployment benefits are ending for many that lost jobs six months ago with no extension from the Obama administration. The take away from the claims data today, as is the case every week, 500K+ a week are losing jobs and has been going on for all of this year. Job losses at 2 mil a month isn't a building block for economic recovery no matter how it is spun. Lipstick on the pig isn't enough to take it to the prom. Also at 8:30 the first look at Q3 GDP was better than expected. The better growth triggered buying in the stock index futures and drove the stock market to a better open at 9:30.
10/28/09
Good morning. Durable Goods numbers (items lasting longer than 3 years) have already come out this morning, rising 1% in September as expected. This was the second increase in the last three months, and but compared with a year ago orders are down about 24 percent. The only scheduled news out for later today is New Home Sales, but we had plenty yesterday to chew on. The Case-Shiller Index saw August as its third straight month of price improvement for the bulk of the twenty cities in its survey and up 1% from July. Dallas showed the smallest drop since August 2008, while Las Vegas showed a 30 percent decrease, the most of any city. The biggest month-over-month gain was in San Francisco, which showed a 2.6% gain. Of course, economists want to see flat-to-rising prices through the winter to be sure that housing is rebounding, but skeptics point to unemployment and commercial real estate as two big hurdles to this happening.
In addition to yesterdays news, the Conference Board’s Consumer Confidence numbers declined in October from September’s levels, which was unexpected and did not help the equity markets. The Treasury‘s 2-yr auction went well and the results helped fixed-income securities, and mortgage prices. This morning, mortgage prices are a shade lower than yesterday afternoon.
In addition to yesterdays news, the Conference Board’s Consumer Confidence numbers declined in October from September’s levels, which was unexpected and did not help the equity markets. The Treasury‘s 2-yr auction went well and the results helped fixed-income securities, and mortgage prices. This morning, mortgage prices are a shade lower than yesterday afternoon.
10/27/09
Good morning. The only news out today is the S&P Case-Shiller Home Price Index and the 7AM PST Consumer Confidence number. And ahead of those numbers, and the 2-yr auction, we’re seeing a slight rebound in mortgage prices.
Monday, October 26, 2009
Mortgage Market Review - 10/26/09
This Morning…Monday, October 26, 2009:
Markets started unchanged this morning with no data or anything else of consequence. At 8:30 the DJIA opened +30 and mortgage rates were slightly higher. There are no economic releases today; Treasury will auction 5 yr notes at 1:00 this afternoon, likely to see decent demand and not generally much interest to traders. After today however the calendar is loaded and Treasury will auction an additional $116B of notes.
Last Week:
Mortgage bond prices ended the week nearly unchanged despite considerable market volatility. Trading was up and down all week. Rates improved the first portion of the week as stocks fell below key psychological levels. Unfortunately a reversal the middle portion of the week eroded the earlier improvements. Data was mixed with tame inflation readings but generally stronger than expected economic activity. For the week, interest rates were near unchanged.
The big news was Existing Home Sales on Friday which looked pretty impressive and was better than forecast. Those forecasts already included the tax credit for first-time home buyers. Sales were up almost 25% from the low in January, and 9% higher than a year ago.
This Week:
This is the last week of the months and will be filled with economic news. Today there is zip, but tomorrow we have Durable Goods for September, the Case-Shiller Index which never seems to go up, and Consumer Confidence, which seems to be holding this economy up. This report is important as markets have laid heavy bets that the economy is on the highway of recovery, but so far there is no significant improvement in consumer patterns of increased spending. These numbers are expected to be up. On Wednesday we have New Homes Sales, Thursday we have Jobless Claims and the Gross Domestic Product results. GDP expectations are for a growth rate of 3.2% for the quarter. Then on Friday comes Personal Income and Consumption, the Michigan Consumer survey, and the Chicago PMI. A big week ahead that is a huge hill to climb for the bond and mortgage markets.
EconomicIndicator
Durable Goods Orders
Tuesday, Oct. 27, 8:30 am, et
Up 0.7%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Oct. 27, 10:00 am, et
54.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, Oct. 27,1:30 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
New Home Sales
Wednesday, Oct. 28, 10:00 am, et
Up 2.6%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, Oct. 28,1:30 pm, et
None
Important. $41 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q3 Advance GDP
Thursday, Oct. 29,8:30 am, et
Up 3.1%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction
Thursday, Oct. 29,1:30 pm, et
None
Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, Oct. 30,8:30 am, et
Unchanged,Down 0.4%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
Q3 Employment Cost Index
Friday, Oct. 30,8:30 am, et
Up 0.5%
Very important. A measure of wage inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Oct. 30,10:00 am, et
70.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
Supply and expected better economic releases this week are taking their toll at the moment and over the long term the path for rates is not looking particularly good. In the short haul, the Treasury auctions will take center stage again this week. If there is strong foreign demand it will likely spill over to the mortgage bond market. Weak auctions will likely result in mortgage interest rate increases. Employment cost index data will also be carefully watched.
Some Humor:
It's late fall and the Indians on a remote reservation in South Dakota asked their new chief if the coming winter was going to be cold or mild. Since he was a chief in a modern society, he had never been taught the old secrets. When he looked at the sky, he couldn't tell what the winter was going to be like. Nevertheless, to be on the safe side, he told his tribe that the winter was indeed going to be cold and that the members of the village should collect firewood to be prepared.
But, being a practical leader, after several days, he got an idea. He went to the phone booth, called the National Weather Service and asked, “Is the coming winter going to be cold?”
“It looks like this winter is going to be quite cold,” the meteorologist at the weather service responded.
So the chief went back to his people and told them to collect even more firewood in order to be prepared.
A week later, he called the National Weather Service again. “Does it still look like it is going to be a very cold winter?"
“Yes,” the man at National Weather Service again replied, “it's going to be a very cold winter.”
The chief again went back to his people and ordered them to collect every scrap of firewood they could find.
Two weeks later, the chief called the National Weather Service again. “Are you absolutely sure that the winter is going to be very cold?”
“Absolutely,” the man replied. “It's looking more and more like it is going to be one of the coldest winters we've ever seen.”
“How can you be so sure?” the chief asked.
The weatherman replied, “The Indians are collecting firewood like crazy.”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Markets started unchanged this morning with no data or anything else of consequence. At 8:30 the DJIA opened +30 and mortgage rates were slightly higher. There are no economic releases today; Treasury will auction 5 yr notes at 1:00 this afternoon, likely to see decent demand and not generally much interest to traders. After today however the calendar is loaded and Treasury will auction an additional $116B of notes.
Last Week:
Mortgage bond prices ended the week nearly unchanged despite considerable market volatility. Trading was up and down all week. Rates improved the first portion of the week as stocks fell below key psychological levels. Unfortunately a reversal the middle portion of the week eroded the earlier improvements. Data was mixed with tame inflation readings but generally stronger than expected economic activity. For the week, interest rates were near unchanged.
The big news was Existing Home Sales on Friday which looked pretty impressive and was better than forecast. Those forecasts already included the tax credit for first-time home buyers. Sales were up almost 25% from the low in January, and 9% higher than a year ago.
This Week:
This is the last week of the months and will be filled with economic news. Today there is zip, but tomorrow we have Durable Goods for September, the Case-Shiller Index which never seems to go up, and Consumer Confidence, which seems to be holding this economy up. This report is important as markets have laid heavy bets that the economy is on the highway of recovery, but so far there is no significant improvement in consumer patterns of increased spending. These numbers are expected to be up. On Wednesday we have New Homes Sales, Thursday we have Jobless Claims and the Gross Domestic Product results. GDP expectations are for a growth rate of 3.2% for the quarter. Then on Friday comes Personal Income and Consumption, the Michigan Consumer survey, and the Chicago PMI. A big week ahead that is a huge hill to climb for the bond and mortgage markets.
EconomicIndicator
Durable Goods Orders
Tuesday, Oct. 27, 8:30 am, et
Up 0.7%
Important. An indication of the demand for "big ticket" items. Weakness may lead to lower rates.
Consumer Confidence
Tuesday, Oct. 27, 10:00 am, et
54.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction
Tuesday, Oct. 27,1:30 pm, et
None
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
New Home Sales
Wednesday, Oct. 28, 10:00 am, et
Up 2.6%
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction
Wednesday, Oct. 28,1:30 pm, et
None
Important. $41 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q3 Advance GDP
Thursday, Oct. 29,8:30 am, et
Up 3.1%
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction
Thursday, Oct. 29,1:30 pm, et
None
Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Personal Income and Outlays
Friday, Oct. 30,8:30 am, et
Unchanged,Down 0.4%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
Q3 Employment Cost Index
Friday, Oct. 30,8:30 am, et
Up 0.5%
Very important. A measure of wage inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Oct. 30,10:00 am, et
70.0
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
Supply and expected better economic releases this week are taking their toll at the moment and over the long term the path for rates is not looking particularly good. In the short haul, the Treasury auctions will take center stage again this week. If there is strong foreign demand it will likely spill over to the mortgage bond market. Weak auctions will likely result in mortgage interest rate increases. Employment cost index data will also be carefully watched.
Some Humor:
It's late fall and the Indians on a remote reservation in South Dakota asked their new chief if the coming winter was going to be cold or mild. Since he was a chief in a modern society, he had never been taught the old secrets. When he looked at the sky, he couldn't tell what the winter was going to be like. Nevertheless, to be on the safe side, he told his tribe that the winter was indeed going to be cold and that the members of the village should collect firewood to be prepared.
But, being a practical leader, after several days, he got an idea. He went to the phone booth, called the National Weather Service and asked, “Is the coming winter going to be cold?”
“It looks like this winter is going to be quite cold,” the meteorologist at the weather service responded.
So the chief went back to his people and told them to collect even more firewood in order to be prepared.
A week later, he called the National Weather Service again. “Does it still look like it is going to be a very cold winter?"
“Yes,” the man at National Weather Service again replied, “it's going to be a very cold winter.”
The chief again went back to his people and ordered them to collect every scrap of firewood they could find.
Two weeks later, the chief called the National Weather Service again. “Are you absolutely sure that the winter is going to be very cold?”
“Absolutely,” the man replied. “It's looking more and more like it is going to be one of the coldest winters we've ever seen.”
“How can you be so sure?” the chief asked.
The weatherman replied, “The Indians are collecting firewood like crazy.”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, October 23, 2009
10/23/09
Good morning. Yesterday rates worsened early in the day, and then pretty much seemed to stay put and watch the equity markets come back from Wednesday’s losses. The Leading Economic Indicators number did not help the call for lower rates: it was up more than forecasted for September and its sixth straight increase. In today’s news, Sept existing home sales expected to be up 4.7%, jumped 9.4%. Wow. The median sales price $174,900.00, 7.8 months supply, and inventory levels fell to the lowest inventories since March of 2007. As a result mortgage rates have worsened this morning. Have a great weekend and call me with any questions.
10/22/09
Good morning. Today mortgage prices are a shade worse than Wednesday afternoon’s levels. Yesterday was the Fed’s Beige Book report which comes out eight times a year and summarizes the Fed’s twelve districts. The Fed reported that the economy has shown signs of stabilizing or modestly improving, but the signs are still not enough to move the entire economy. The housing market and manufacturing activity have improved but commercial real estate remains a big concern. Inflation “ain’t no problem”, the labor market is still weak or at best mixed, and demand for bank loans was weak or declining.
This morning we had Jobless Claims, which rose more than expected last week. Yes, the employment area still looks slow. Initial claims for state jobless insurance increased to 531,000 after declining for two consecutive weeks. Analysts had forecast new claims going down to 515,000 last week. And later today we will have Leading Economic Indicators.
This morning we had Jobless Claims, which rose more than expected last week. Yes, the employment area still looks slow. Initial claims for state jobless insurance increased to 531,000 after declining for two consecutive weeks. Analysts had forecast new claims going down to 515,000 last week. And later today we will have Leading Economic Indicators.
10/21/09
The good news is that according to the median estimates, the FOMC will keep the target rate for overnight funds unchanged for another year. And yesterday, after the initial movement, rates didn’t do much and actually stayed in a pretty tight range. Here this morning things are slightly worse, in spite of stocks around the world being down, and no US economic news. Mortgages look weaker as well with pricing worsened. Later this morning, however, the Federal Reserve will release their Beige Book which details economic conditions in all the US regions. As I’ve said, all one has to do is drive down Main Street in any town and count the “For Rent” signs.
10/20/09
Good morning. Today we had Housing Starts and Building Permits. New construction of U.S. homes, however rose by less than expected in September: Housing Starts were up only.5% (Friday we have the September Existing Home Sales data, expected to show a small improvement.). We also had the Producer Price Index, expected to be flat but instead dropping .6% in September, mainly because of a 2.4 percent decline in energy prices. For the year the PPI is down 4.8%. What inflation? After the numbers mortgage rates are slightly better this morning.
Monday, October 19, 2009
Mortgage Market Review - 10/19/09
This Morning…Monday, October 19, 2009:
The markets opened lower in price this morning, but are holding at support levels. There are no economic releases on the schedule today and the market will likely float in a low end range awaiting news, while chatter will continue over the possibility the Fed is preparing to pull the trigger on higher rates. This morning, mortgage rates opened slightly higher.
Last Week:
Mortgage bond prices fell sharply last week driving mortgage rates higher. Rates were under pressure from better than expected economic news and rising stocks. Retail sales, weekly jobless claims, and industrial production data were all better than expected. The improved economic outlook had investors flocking to buy stocks, which helped the Dow Jones index to close over 10,000.
This Week:
As I mentioned there is no news today, but on the 20th we have the Producer Price Index, and Housing Starts & Building Permits. Nada for Wednesday, and then on Thursday we have Leading Economic Indicators and Jobless Claims. We finish the week off with Existing Home Sales. Two optimistic possibilities for the housing markets that are swimming around; the Obama administration is seriously considering extending the first time home buyers tax credit, and in the FOMC minutes of the 9/23 meeting there were a few members talking about the possibilities of the Fed increasing its purchases of Mortgage Backed Securities after the buy ends at the end of Q1 2010 (see comments below). This is potentially good news.
EconomicIndicator
Housing Starts
Tuesday, Oct. 20,8:30 am, et
Up 1.5%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Producer Price Index
Tuesday, Oct. 20,8:30 am, et
Up 0.1%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.
Fed "Beige Book"
Wednesday, Oct. 21,2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Leading Economic Indicators
Thursday, Oct. 22,10:00 am, et
Up 0.8%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Existing Home Sales
Friday, Oct. 23,10:00 am, et
Up 5.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Market Forecast:
The producer price index data to be released Tuesday will be the most important data this week. Any signs of inflation will generally not bode well for mortgage bonds. The Fed "Beige Book" will factor into trading this week. Stock strength and dollar valuation will play a pivotal role in mortgage interest rates as well.
What about the future of interest rates? Opinions are very divided. Many top economists believe that our economy will grow through the rest of this year, and then slow in the first half of 2010. (How did it get to be almost “2010” already?) In a recent release they stated, “While the lack of inflation, high unemployment and excess capacity in the economy should hold interest rates down, there is a lot of uncertaint0y regarding rates immediately following the termination of the Federal Reserve’s purchase of mortgage-backed securities. No doubt the Fed will do its best to minimize adverse effects, but the elimination of these purchases will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries.”
In spite of credit and equity issues still being more of a concern than interest rates for most, most economists are divided on where interest rates are going. On the “they’re going higher” side, smart folks point to the Treasury's financing need of an additional $2 trillion and their stated objective to lengthen the average maturity of their debt. In addition, if the economy really does start to pick up steam, and investors increase their risk appetite, this will also put upward pressure on yields. On the “they’re going to stay low” side, economists point to the continued high unemployment, soon to be in the double digits, low consumer spending, and rough housing market in many parts of the states. Perhaps the Fed remains on hold until 2011 and then only gradually raises rates, eventually bringing the Fed funds target up to 1.00% by year end. And maybe, in spite of gold continuing to set records and oil high, inflation remains low. As you can see…nobody knows!
Some Humor:
Several men are in the locker room of a golf club. A cell phone on a bench rings and a man engages the hands free speaker-function and begins to talk. Everyone else in the room stops to listen.
MAN: "Hello"
WOMAN: "Honey, it's me. Are you at the club?"
MAN: "Yes."
WOMAN: "I am at the mall now and found this beautiful leather coat. It's only $1,000. Is it OK if I buy it?"
MAN: "Sure, go ahead if you like it that much."
WOMAN: "I also stopped by the Mercedes dealership and saw the new 2010 models. I saw one I really liked."
MAN: "How much?"
WOMAN: "$90,000."
MAN: "OK, but for that price I want it with all the options."
WOMAN: "Great! Oh, and one more thing... The house I wanted last year is back on the market. They're asking $950,000."
MAN: "Well, then go ahead and give them an offer of $900,000. They will probably take it. If not, we can go the extra 50 thousand. It's really a pretty good price."
WOMAN: "OK. I'll see you later! I love you so much!!"
MAN: "Bye! I love you, too."
The man hangs up. The other men in the locker room are staring at him in astonishment, mouths agape.....He smiles and asks: "Anyone know who this phone belongs to?"
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
The markets opened lower in price this morning, but are holding at support levels. There are no economic releases on the schedule today and the market will likely float in a low end range awaiting news, while chatter will continue over the possibility the Fed is preparing to pull the trigger on higher rates. This morning, mortgage rates opened slightly higher.
Last Week:
Mortgage bond prices fell sharply last week driving mortgage rates higher. Rates were under pressure from better than expected economic news and rising stocks. Retail sales, weekly jobless claims, and industrial production data were all better than expected. The improved economic outlook had investors flocking to buy stocks, which helped the Dow Jones index to close over 10,000.
This Week:
As I mentioned there is no news today, but on the 20th we have the Producer Price Index, and Housing Starts & Building Permits. Nada for Wednesday, and then on Thursday we have Leading Economic Indicators and Jobless Claims. We finish the week off with Existing Home Sales. Two optimistic possibilities for the housing markets that are swimming around; the Obama administration is seriously considering extending the first time home buyers tax credit, and in the FOMC minutes of the 9/23 meeting there were a few members talking about the possibilities of the Fed increasing its purchases of Mortgage Backed Securities after the buy ends at the end of Q1 2010 (see comments below). This is potentially good news.
EconomicIndicator
Housing Starts
Tuesday, Oct. 20,8:30 am, et
Up 1.5%
Important. A measure of housing sector strength. Weakness may lead to lower rates.
Producer Price Index
Tuesday, Oct. 20,8:30 am, et
Up 0.1%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.
Fed "Beige Book"
Wednesday, Oct. 21,2:00 pm, et
None
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Leading Economic Indicators
Thursday, Oct. 22,10:00 am, et
Up 0.8%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Existing Home Sales
Friday, Oct. 23,10:00 am, et
Up 5.5%
Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
Market Forecast:
The producer price index data to be released Tuesday will be the most important data this week. Any signs of inflation will generally not bode well for mortgage bonds. The Fed "Beige Book" will factor into trading this week. Stock strength and dollar valuation will play a pivotal role in mortgage interest rates as well.
What about the future of interest rates? Opinions are very divided. Many top economists believe that our economy will grow through the rest of this year, and then slow in the first half of 2010. (How did it get to be almost “2010” already?) In a recent release they stated, “While the lack of inflation, high unemployment and excess capacity in the economy should hold interest rates down, there is a lot of uncertaint0y regarding rates immediately following the termination of the Federal Reserve’s purchase of mortgage-backed securities. No doubt the Fed will do its best to minimize adverse effects, but the elimination of these purchases will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries.”
In spite of credit and equity issues still being more of a concern than interest rates for most, most economists are divided on where interest rates are going. On the “they’re going higher” side, smart folks point to the Treasury's financing need of an additional $2 trillion and their stated objective to lengthen the average maturity of their debt. In addition, if the economy really does start to pick up steam, and investors increase their risk appetite, this will also put upward pressure on yields. On the “they’re going to stay low” side, economists point to the continued high unemployment, soon to be in the double digits, low consumer spending, and rough housing market in many parts of the states. Perhaps the Fed remains on hold until 2011 and then only gradually raises rates, eventually bringing the Fed funds target up to 1.00% by year end. And maybe, in spite of gold continuing to set records and oil high, inflation remains low. As you can see…nobody knows!
Some Humor:
Several men are in the locker room of a golf club. A cell phone on a bench rings and a man engages the hands free speaker-function and begins to talk. Everyone else in the room stops to listen.
MAN: "Hello"
WOMAN: "Honey, it's me. Are you at the club?"
MAN: "Yes."
WOMAN: "I am at the mall now and found this beautiful leather coat. It's only $1,000. Is it OK if I buy it?"
MAN: "Sure, go ahead if you like it that much."
WOMAN: "I also stopped by the Mercedes dealership and saw the new 2010 models. I saw one I really liked."
MAN: "How much?"
WOMAN: "$90,000."
MAN: "OK, but for that price I want it with all the options."
WOMAN: "Great! Oh, and one more thing... The house I wanted last year is back on the market. They're asking $950,000."
MAN: "Well, then go ahead and give them an offer of $900,000. They will probably take it. If not, we can go the extra 50 thousand. It's really a pretty good price."
WOMAN: "OK. I'll see you later! I love you so much!!"
MAN: "Bye! I love you, too."
The man hangs up. The other men in the locker room are staring at him in astonishment, mouths agape.....He smiles and asks: "Anyone know who this phone belongs to?"
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, October 16, 2009
10/16/09
Being Friday trade will likely have a narrow range through the remainder of the day. The wider outlook is bearish for the bond and mortgage markets and it seems the market wants to settle in the 5.00% to 5.25% range for mortgage rates. So far this morning mortgage markets are somewhat soft. Have a great weekend
10/15/09
Good morning. With the stock markets receiving all the attention right now, the bond market still held on Wednesday. This morning’s Consumer Price Index report, which most had expected to remain tame, did not disappoint: the CPI was only +.2% last month. Food prices fell for the sixth time in the last eight months. And compared to the same period last year, consumer prices dropped 1.3%. We also had new Jobless Claims unexpectedly fall last week to their lowest level since January. New jobless claims have declined for five of the last six weeks, and the four-week moving average for new claims dipped 9,000 last week, declining for a sixth straight week. After the numbers this morning showing low inflation and an “ok” job market we find mortgage prices worse by between .125 and .250.
10/14/09
Treasuries were weak from the get-go this morning with the stock indexes roaring higher; the DJIA at 8:00 was trading +90. No signs of any weakness in the equity markets as the DJIA is now seen headed to 10K. JP Morgan profits were well above forecasts (about 7 times better), and is driving all bank and financial stocks higher this morning, taking the entire market up with it and Sept retail sales were better than expected this morning. As a result, mortgage rates have moved a bit higher.
At 2:00 the FOMC minutes are the day's biggest known-unknown, with the market sniffing for hints of dissention on rate hike timing among the ranks and inflation concern. While no one is expecting a tightening move from the Fed for many more months until unemployment bottoms, markets will be way out front in driving rates higher----slowly, but moving higher.
At 2:00 the FOMC minutes are the day's biggest known-unknown, with the market sniffing for hints of dissention on rate hike timing among the ranks and inflation concern. While no one is expecting a tightening move from the Fed for many more months until unemployment bottoms, markets will be way out front in driving rates higher----slowly, but moving higher.
10/13/09
Good morning. After the heavy selling on Thursday and Friday last week treasuries and mortgages are starting better this morning. As noted in Friday's report we expect increased market volatility this week; the reversal and heavy selling last week purged a lot of bullishness as interest rates finally hit their low yields. The trigger last Thursday was the weak demand for the 30 yr bond auction, comments from various Fed officials that the Fed was preparing to drain bank reserves with reverse repos, Australia increasing its base rates, and the exploding federal deficits driven by the mostly wasted bailout money. Mortgage rates fell below 5% a week ago, but they too will likely find it difficult to decline more. Regardless of the arguments either side of the rate debate; there is a limit that rates cannot exceed, we believe we have hit those limits as long as there is no major change in sentiment on the economic outlook. If you are “on the fence” you might want to consider making a move.
Monday, October 12, 2009
Mortgage Market Review - 10/12/09
So, as the song goes, “in 1492 Columbus sailed the ocean blue.” Christopher Columbus seems to be one of those heroes we learned about when we were young (like Custer), that upon closer investigation was not all they were cracked up to be. That’s why this holiday seems curious to me. However, I am happy for those that get a paid day off of work. Oh well, onto news. This weekend a slew of professionals tied to the housing sector made eager pleas to Congress requesting the $8000 first time homebuyer tax credit be extended. The benefit was part of the stimulus plan and is set to expire the end of November. The White House indicated the program "helped the economy" and led to "quite a bit of success" and noted consideration of extending the program. There are additional proposals in the Senate to not only extend the program but also to increase the tax credit and remove the first time homebuyer qualification. Unfortunately the cost to extend the credit is around $1 billion per month. This has politicians from both sides of the isle concerned. I’ll keep you posted on this. In the meantime, thanks for looking this over. I hope you find it useful and informative.
Fred
This Morning…Monday, October 12, 2009:
Nothing to report today; the bond and mortgage markets are closed for the Columbus Day holiday. Most markets are closed, but the stock market is not.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The Treasury auctions were mixed with the 3 and 10-year auctions showing decent foreign demand. Unfortunately the 30-year auction was a huge disappointment and caused mortgage interest rates to worsen Thursday. The fear of future rate hikes sent mortgage bonds lower Friday pushing mortgage interest rates higher.
Friday’s price action was a sign that markets can move quickly, and not always in expected ways. Why did rates shoot up Friday? As I’ve been mentioning, rates have been staying low for awhile and when markets move one way or the other to a large degree, or for an extended period of time, they are likely to rebound the other way – just like a rubber band. Plain and simple.
This Week:
After the big jump in interest rates last Thursday and Friday we expect to see increased market volatility in the bond and mortgage markets this week. Tomorrow we have a private consumer confidence survey, on Wednesday we have Retail Sales, Thursday Consumer Price Index and Jobless Claims, and then on Friday Industrial Production and Capacity Utilization, and the University of Michigan Consumer Confidence number. The most significant economic data next week will be the CPI monthly inflation report. The minutes from the September 23 Fed meeting will come out on Wednesday.
EconomicIndicator
Retail Sales
Wednesday, Oct. 14,8:30 am, et
Down 2.0%
Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Business Inventories
Wednesday, Oct. 14,10:00 am, et
Down 0.8%
Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
Fed Minutes
Wednesday, Oct. 14,2:00 pm, et
None
Important. Details of the last Fed meeting will be thoroughly analyzed.
Consumer Price Index
Thursday, Oct. 15,8:30 am, et
Up 0.2%,Core up 0.1%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Philadelphia Fed Survey
Thursday, Oct. 15,10:00 am, et
None
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Industrial Production
Friday, Oct. 16,9:15 am, et
Up 0.1%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Friday, Oct. 16,9:15 am, et
69.7%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Oct. 16,10:00 am, et
73.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
The consumer price index will be the most important release this week. Any signs of inflation will generally not bode well for mortgage bonds. Retail sales and the Fed minutes are also likely to factor into trading this week. Any surprises may lead to mortgage interest rate volatility.
Some Humor:
An 80-year-old man goes for a physical. All of his tests come back with normal results. The doctor says, “Bert, everything looks great. How are you doing mentally and emotionally? Are you at peace with God?”Bert replies, “God and I are tight. He knows I have poor eyesight, so he's fixed it for when I get up in the middle of the night to go to the bathroom. Poof! The light goes on. When I'm done, poof, the light goes off.”
“Wow, that's incredible,” the doctor says.
A little later in the day, the doctor calls Bert's wife.
“Ethel,” he says, “Bert is doing fine but I had to call you because I'm in awe of his relationship with God. Is it true that he gets up during the night and poof, the light goes on in the bathroom, and when he's done, poof the light goes off?”
“OH MY GAWD!” Ethel exclaims. “He's piddling in the refrigerator again!”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Fred
This Morning…Monday, October 12, 2009:
Nothing to report today; the bond and mortgage markets are closed for the Columbus Day holiday. Most markets are closed, but the stock market is not.
Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. The Treasury auctions were mixed with the 3 and 10-year auctions showing decent foreign demand. Unfortunately the 30-year auction was a huge disappointment and caused mortgage interest rates to worsen Thursday. The fear of future rate hikes sent mortgage bonds lower Friday pushing mortgage interest rates higher.
Friday’s price action was a sign that markets can move quickly, and not always in expected ways. Why did rates shoot up Friday? As I’ve been mentioning, rates have been staying low for awhile and when markets move one way or the other to a large degree, or for an extended period of time, they are likely to rebound the other way – just like a rubber band. Plain and simple.
This Week:
After the big jump in interest rates last Thursday and Friday we expect to see increased market volatility in the bond and mortgage markets this week. Tomorrow we have a private consumer confidence survey, on Wednesday we have Retail Sales, Thursday Consumer Price Index and Jobless Claims, and then on Friday Industrial Production and Capacity Utilization, and the University of Michigan Consumer Confidence number. The most significant economic data next week will be the CPI monthly inflation report. The minutes from the September 23 Fed meeting will come out on Wednesday.
EconomicIndicator
Retail Sales
Wednesday, Oct. 14,8:30 am, et
Down 2.0%
Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Business Inventories
Wednesday, Oct. 14,10:00 am, et
Down 0.8%
Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
Fed Minutes
Wednesday, Oct. 14,2:00 pm, et
None
Important. Details of the last Fed meeting will be thoroughly analyzed.
Consumer Price Index
Thursday, Oct. 15,8:30 am, et
Up 0.2%,Core up 0.1%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Philadelphia Fed Survey
Thursday, Oct. 15,10:00 am, et
None
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Industrial Production
Friday, Oct. 16,9:15 am, et
Up 0.1%
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization
Friday, Oct. 16,9:15 am, et
69.7%
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment
Friday, Oct. 16,10:00 am, et
73.5
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Market Forecast:
The consumer price index will be the most important release this week. Any signs of inflation will generally not bode well for mortgage bonds. Retail sales and the Fed minutes are also likely to factor into trading this week. Any surprises may lead to mortgage interest rate volatility.
Some Humor:
An 80-year-old man goes for a physical. All of his tests come back with normal results. The doctor says, “Bert, everything looks great. How are you doing mentally and emotionally? Are you at peace with God?”Bert replies, “God and I are tight. He knows I have poor eyesight, so he's fixed it for when I get up in the middle of the night to go to the bathroom. Poof! The light goes on. When I'm done, poof, the light goes off.”
“Wow, that's incredible,” the doctor says.
A little later in the day, the doctor calls Bert's wife.
“Ethel,” he says, “Bert is doing fine but I had to call you because I'm in awe of his relationship with God. Is it true that he gets up during the night and poof, the light goes on in the bathroom, and when he's done, poof the light goes off?”
“OH MY GAWD!” Ethel exclaims. “He's piddling in the refrigerator again!”
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
10/8/09
This morning we had our usual Thursday Jobless Claims, and later we have a 30-yr auction to get through. As a side note to keep in mind about unemployment, most figure that it will hit double digits soon. And for every person who shows up as unemployed in the report from the Bureau of Labor Statistics, there’s another person who does not appear because they are either too discouraged to look for work, or working part-time and earning less. This shadow will have ramifications on consumer spending! That being said, new claims for jobless insurance fell more than expected, hitting a nine-month low last week. After the 5:30AM news we find mortgage prices a shade worse.
10/7/09
Yesterday’s 3-year note auction was decent and foreign investors were active. With no news today except for the 10-yr auction, mortgage security prices are a shade better than yesterday afternoon.
10/6/09
In the markets, yesterday was a relatively quiet day. Rates are still low, and the stock market improved somewhat, which tends to make the US populace feel a little better about things. In fact, in spite of the profit margins, interest rates for 30-year fixed-rate mortgages are near last May’s levels. And 15-yr rates, where interestingly enough the principal portion of the early payments is about half of the total P&I, are the lowest in decades. So these rates, combined with the potential end of the $8,000 tax credit and some great pricing, are certainly helping to stabilize home sales. New home sales are the highest they’ve been in a year, and inventories are the lowest they’ve been in decades. One cloud on the horizon, as it always is, is this week's Treasury auction. Or, put another way, with the supply this week don’t look for a big drop in rates unless the stock markets continue their downward path, which may be unlikely. Today mortgage security prices are about unchanged.
Monday, October 5, 2009
Mortgage Market Review - 10/5/09
This Morning…Monday, October 5, 2009:
The bond and mortgage markets opened a little better this morning after a volatile session last Friday on the larger decline in Sept job losses than expected. At 9:30 the Dow is up +21 and mortgage prices are stable. We can rest up this week, given that the only scheduled news of substance is not until Thursday with Jobless Claims, and some trade figures on Thursday and Friday.
Last Week:
Last week was a volatile but good week for the rate markets. Mortgage rates fell to their lowest levels since last April. Treasuries continued in demand from foreign central banks and domestic investors; likely some of the buying is associated with new concerns that the economy isn't on the fast track of recovery as markets were expecting recently. Job losses in Sept were a third higher than markets were expecting, increasing the fears that unemployment is not close to bottoming. Consumer confidence came in weaker than expected and the ADP employment release showed more job losses than expected. The employment report Friday morning confirmed the ADP payroll data. With inflation fears waning and increasing uncertainty have helped to make interest rates decline in the past two weeks.
This Week:
Confidence for a quick economic recovery has been shaken a little but most analysts expect investors will step up to buy securities on any major dip in the market. There a just three first tier economic releases this week; Monday the Sept ISM services sector report, Wednesday the August consumer credit report, and on Thursday weekly jobless claims are expected be down from last week.
EconomicIndicator
3-year Treasury Note Auction
Tuesday, Oct. 6,1:30 pm, et
None
Important. $39 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Wednesday, Oct. 7,1:30 pm, et
None
Important. $20 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Credit
Wednesday, Oct. 7,2:00 pm, et
Down $9.5 billion
Low importance. A significantly larger than expected figure may lead to lower mortgage interest rates.
Weekly Jobless Claims
Thursday, Oct. 8,8:30 am, et
None
Moderately Important. A measure of employment. Job weakness may help rates improve.
30-year Treasury Bond Auction
Thursday, Oct. 9,1:30 pm, et
None
Important. $12 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Friday, Oct. 9,8:30 am, et
$33 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
Market Forecast:
This week the economic calendar has little to chew on, but what there is significant in the running debate on the future of the economy. Another round of Treasury auctions hits the market this week. Solid foreign demand will help rates remain the same or improve slightly. Signs that foreign demand is diminishing will not bode well for mortgage interest rates. Weekly jobless claims set for release Thursday will carry a bit more weight than usual due to the lack of other economic data.
Some Humor:
Two women were out for a Saturday stroll. One had a Doberman and the other, a Chihuahua. As they walked down the street, the one with the Doberman said to her friend, "Let's go over to that bar for a drink."
The lady with the Chihuahua said, "We can't go in there. We've got the dogs with us."
The one with the Doberman said, "Just watch, and do as I do."
They walked over to the bar and the one with the Doberman put on a pair of dark glasses and started to walk in. The bouncer at the door said, "Sorry, lady, no pets allowed."
The woman with the Doberman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Doberman?"
The woman said, "Yes, they're using them now. They're very good."
The bouncer said, "OK, come on in."
The lady with the Chihuahua thought that convincing him that a Chihuahua was a seeing-eye dog, may be a bit more difficult, but thought, "What the heck," so she put on her dark glasses and started to walk in.
Once again the bouncer said, "Sorry, lady, no pets allowed."
The woman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Chihuahua?"
The woman said indignantly, "A Chihuahua? You've got to be kidding me, they gave me a Chihuahua???!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
The bond and mortgage markets opened a little better this morning after a volatile session last Friday on the larger decline in Sept job losses than expected. At 9:30 the Dow is up +21 and mortgage prices are stable. We can rest up this week, given that the only scheduled news of substance is not until Thursday with Jobless Claims, and some trade figures on Thursday and Friday.
Last Week:
Last week was a volatile but good week for the rate markets. Mortgage rates fell to their lowest levels since last April. Treasuries continued in demand from foreign central banks and domestic investors; likely some of the buying is associated with new concerns that the economy isn't on the fast track of recovery as markets were expecting recently. Job losses in Sept were a third higher than markets were expecting, increasing the fears that unemployment is not close to bottoming. Consumer confidence came in weaker than expected and the ADP employment release showed more job losses than expected. The employment report Friday morning confirmed the ADP payroll data. With inflation fears waning and increasing uncertainty have helped to make interest rates decline in the past two weeks.
This Week:
Confidence for a quick economic recovery has been shaken a little but most analysts expect investors will step up to buy securities on any major dip in the market. There a just three first tier economic releases this week; Monday the Sept ISM services sector report, Wednesday the August consumer credit report, and on Thursday weekly jobless claims are expected be down from last week.
EconomicIndicator
3-year Treasury Note Auction
Tuesday, Oct. 6,1:30 pm, et
None
Important. $39 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction
Wednesday, Oct. 7,1:30 pm, et
None
Important. $20 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Credit
Wednesday, Oct. 7,2:00 pm, et
Down $9.5 billion
Low importance. A significantly larger than expected figure may lead to lower mortgage interest rates.
Weekly Jobless Claims
Thursday, Oct. 8,8:30 am, et
None
Moderately Important. A measure of employment. Job weakness may help rates improve.
30-year Treasury Bond Auction
Thursday, Oct. 9,1:30 pm, et
None
Important. $12 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Trade Data
Friday, Oct. 9,8:30 am, et
$33 billion deficit
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
Market Forecast:
This week the economic calendar has little to chew on, but what there is significant in the running debate on the future of the economy. Another round of Treasury auctions hits the market this week. Solid foreign demand will help rates remain the same or improve slightly. Signs that foreign demand is diminishing will not bode well for mortgage interest rates. Weekly jobless claims set for release Thursday will carry a bit more weight than usual due to the lack of other economic data.
Some Humor:
Two women were out for a Saturday stroll. One had a Doberman and the other, a Chihuahua. As they walked down the street, the one with the Doberman said to her friend, "Let's go over to that bar for a drink."
The lady with the Chihuahua said, "We can't go in there. We've got the dogs with us."
The one with the Doberman said, "Just watch, and do as I do."
They walked over to the bar and the one with the Doberman put on a pair of dark glasses and started to walk in. The bouncer at the door said, "Sorry, lady, no pets allowed."
The woman with the Doberman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Doberman?"
The woman said, "Yes, they're using them now. They're very good."
The bouncer said, "OK, come on in."
The lady with the Chihuahua thought that convincing him that a Chihuahua was a seeing-eye dog, may be a bit more difficult, but thought, "What the heck," so she put on her dark glasses and started to walk in.
Once again the bouncer said, "Sorry, lady, no pets allowed."
The woman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Chihuahua?"
The woman said indignantly, "A Chihuahua? You've got to be kidding me, they gave me a Chihuahua???!
The material contained in this newsletter is provided by a compilation of third parties to real estate, financial services and other professionals for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
Friday, October 2, 2009
10/2/09
Good morning. Yesterday we had some decent economic news. Pending Home Sales were up in August, and are at their highest level since early 2007. We also had Construction Spending increase in August, which balanced out a revision to the July numbers.
Today was the “big daddy” unemployment numbers that always make it into the headlines Saturday morning. Estimates heading into today had job losses pegged at 175-200,000 for September with the Unemployment Rate hitting 9.8%. “Weak but improving” was the term some economist were using for the job market – until this morning. U.S. employers cut 263,000 jobs in September, pushing the unemployment rate to 9.8%. 9.8% is the highest rate since mid-1983 and payrolls had now dropped for 21 consecutive months. After the number stocks are getting hit again and mortgage prices have improved. Have a GREAT weekend!
Today was the “big daddy” unemployment numbers that always make it into the headlines Saturday morning. Estimates heading into today had job losses pegged at 175-200,000 for September with the Unemployment Rate hitting 9.8%. “Weak but improving” was the term some economist were using for the job market – until this morning. U.S. employers cut 263,000 jobs in September, pushing the unemployment rate to 9.8%. 9.8% is the highest rate since mid-1983 and payrolls had now dropped for 21 consecutive months. After the number stocks are getting hit again and mortgage prices have improved. Have a GREAT weekend!
10/1/09
Good morning. Today we’ve already seen the weekly Jobless Claims numbers, along with Personal Income and Consumption (which seem to be called “Outlays” these days). At 7AM we have the Construction Spending numbers, ISM Manufacturing Index, and Pending Home Sales. Spending/Consumption/Outlays, whatever, was up in August (the 4th month in a row and its fastest pace in nearly 8 years), and Personal Income was up as well. So the good news for the economy is that folks are spending, but the bad news is that the savings rate declined for the third straight month. But Jobless Claims were up from the prior week. Overall the numbers have pushed rates slightly lower:
Tomorrow we will have some important data. Estimates for Nonfarm Payroll are ranging around a loss of 175-200k. Lately the news about the economy has indicated that not everything is rosy. As always, it is a wait and see attitude regarding the economy. Hang in there.
Tomorrow we will have some important data. Estimates for Nonfarm Payroll are ranging around a loss of 175-200k. Lately the news about the economy has indicated that not everything is rosy. As always, it is a wait and see attitude regarding the economy. Hang in there.
9/30/09
Today we had the ADP (non farm employment) jobs number which showed more job losses than estimated, and the final GDP number for the 2nd quarter. The Commerce Department's final number for GDP (Gross Domestic Product) showed it fell at a 0.7% annual rate instead of the 1.0% decline reported last month, in theory better for the economy and worse for rates especially since he economy is believed to have rebounded in the last few months – or at least leveled off. After the news mortgage prices are slightly worsened. No additional data due; all about trading off stocks through the rest of the day
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